Finance minister, Kenneth Matambo will present the budget for the financial year 2015/2016 tomorrow and the speech comes in a low economic growth environmentÔÇöthat may force austerity measures especially that government wants to achieve a balanced budget.
There is a lot at stake in the speech especially that the state and the ruling party, the Botswana Democratic Party (BDP), have to deliver jobs as a promise from the 2014 general elections.
Dr Grace Tabengwa Ag. Senior Research Fellow and Macroeconomist at Botswana Institute for Development Policy Analysis (BIDPA), thinks the budget will continue to support agriculture and social welfare schemes for the poor.
However, she warned that the minister should come up with ways to improve efficiency and address bottlenecks that hinders conducive business environment, human capital development and competitiveness amongst major issues.
“…delivery and programme management I guess should be given priority,” Dr Tabengwa said at Afena Capital Press Club meeting at Gaborone Sun this week.
“Beyond budget, we need to see outcomes,” she added. Dr Tabengwa said since Botswana economy performance is still volatile and dependent on mining; it is faced with a major risk as one day diamond revenues will decline.
As the economy is not well diversified and on a low growth trajectory, she advised it will be wise to support business reforms in an effort to give a hand to private sector development.
Diamonds still leads Botswana exports and are major contributors to the country’s GDP with latest statistics from Statistics Botswana showing mining contribution to GDP stood at 21.5 percent in the third quarter of 2014 followed by Trade and Hotels.
Tabengwa told the briefing that the budget will not see any announcement of new projects as the priority will be to maintain existing ones and complete problematic projects like Morupule B. She also foresees a lion share of resource allocation going to traditional culprit ministries including Ministry of Health, Education, Defence and Transport.
“The budget will still be tight,” stated Tabengwa.
Chief Investment Officer of Afena Capital Botswana, Alphonse Ndzinge sees the risk to Botswana economy being the Unites States and the non-performance of non-mining sector.
The U.S is the hub of the global economy and leading consumer of Botswana diamond and tourism market. De Beers Chief Executive Philippe Mellier last week told a sighholder cocktail in Gaborone that the U.S and oil prices will guide Botswana’s economic direction this year.
“One of the star performers in the global economy is expected to be the US, which is clearly good news for diamonds as this is the major destination for diamond jewellery sales,” Mellier said.
“Expectations are for the acceleration of 2014 growth in the US to be maintained on the back of a strong recovery across the major areas of domestic demand.”
He also said the recent downtrend in oil prices is also expected to be an important factor in 2015.
“This should benefit the US economy, but also the emerging markets as the price changes have had the effect of transferring benefit from oil exporters to importers,” he added.
Ndzinge said it is difficult to forecast the direction of oil prices in 2015 as “no one predicted to what happened to the oil prices”.