Wednesday, May 22, 2024

Matambo implements austerity measures

The Minister of Finance, Kenneth Matambo, on Monday announced tax hikes and froze civil servants’ salaries in a bid to curb government spending, a reign in the NBP 10 budget deficit.

When delivering his budget speech on Monday, Matambo warned government that care needs to be taken not to overburden the country’s future economic pathways with too much debt, urging it to be cautious when using accumulated foreign reserves.

“Care needs to be taken not to overburden our future economic pathway with too much debt, which becomes the first call on future revenues.
Government must also exercise caution in the use of accumulated cash reserves to finance development initiatives,” said Matambo.

The Khama administration has in the past been criticised for overspending and burying itself in debt. In the middle of its worst economic recession, the government of Botswana last year announced a 5 % increase on government spending, burning a P 13.5 billion hole in government’s pockets.

Opposition politicians had a field day, slamming government for engaging in populist and unsustainable spending that was meant to sway voters during an election year.

Economic commentators, among them Keith Jefferies, also warned that Botswana‘s spending and wanton borrowing may, in the long run, worsen the negative impact of the economic recession.

Gaborone Central Member of Parliament, Dumelang Saleshando, last year also shot salvos at the government for its failure to institute checks and balances aimed at ensuring that Botswana does not fall into the debt trap.

Matambo said that the planned medium term debt management strategy, which will be finalized soon, will ensure that government’s financing needs are met at the lowest possible cost.

“We need to thoroughly examine the way we have been doing our business. We need to accept that today’s challenges require a new set of solutions and strategies, and be prepared to let go of old practices that no longer yield good results. We must find innovative solutions that are consistent with the changed environment,” he said.

Matambo also said that a recent public expenditure review, which dealt with planning, budgeting and financial management issues, revealed that Botswana’s economy is approaching a period of transition and structural change, which calls for the public sector to focus on the most efficient and effective ways of delivering public services.


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