Tuesday, September 29, 2020

“Mogae’s retirement home”

Dear Editor

The Ministry of Works and Transport has already issued a press release giving the cost of the project in question. As spelt out, the agreed contract sum of the project is P14, 059,843.50. The final cost of the project will only be confirmed upon completion and sign-off of the final account though it is anticipated to be no where near the P20 million mentioned in your article. As you indicated in your paper, I suppose you will endeavor to get the correct information from the Ministry of Works and Transport.

It is unfortunate and incorrect to link such cost overruns with the government’s cost cutting measures, including school fees. You indicate that the report of cost overruns came ten months after a report by the Public Accounts Committee revealed how the Ministry of Finance and Development Planning had to cut money from the budget of old age pensioners, the Botswana Defence Force and other government departments in order to avoid a budget deficit. You further report that the Ministry of Finance and Development Planning unilaterally deconstructed the 2003/04 national budget after it had been approved by Parliament.

The Ministry of Finance and Development Planning does use various measures in its overall strategy of managing the economy and steer it towards achieving the goal of a balanced budget.

As it might be recalled, Botswana has a policy of operating a balanced and sustainable budget. Given limited prospects of raising significant additional revenue, it is imperative that the country exercise more discipline on the expenditure side. In this regard, all efforts are made to avoid continuous budget deficits. You might recall that in the last years of NDP 8, there was a significant excess of expenditure over revenues, averaging in excess of 3.5 percent of GDP. While there might have been justifiable reasons for running budget deficits, to continue on such a similar magnitude was unsustainable. Therefore, following the policy of sustaining the budget, it was clear that repeated deficits of over 3 percent of GDP cannot be allowed. In recognition of this fact, the Ministry of Finance and Development planning had to undertake other measures to set the economy on a sustainable, balanced budget. In accordance with section 14 (2) of the Finance and Audit Act, Cap 54:01, “The unspent balance of any warrant issued under this section may at any time be withdrawn or reduced by the Minister if, in his opinion, the exigencies of the financial situation render such withdrawal or reduction expedient”.

Therefore, the Honorable Minister used the provisions of this section to withdraw a total of P657, 157,080 being part of the unspent balance for ministries/departments.

In approving the budget, parliament sets the amount of expenditure not to be exceeded and further allows the Minister for Finance responsibility of supervising its implementation. This is in accordance with section 4 of the Finance and Audit Act which states that “The Minister shall so supervising the finances of Botswana as to the National Assembly, and that its financial control is maintained, and for such purposes shall, subject to the provisions of the Constitution and this Act, have the control and management of the Consolidated Fund, the Development Fund and all other public funds, and the supervision, control and direction of all matters relating to the financial affairs of Botswana.” Therefore, in exercising the option of withdrawing some funds, the Minister was within the confines of the law as directed by the National Assembly and with the goal of ensuring control and direction of Finances as misleading or just lack of understanding/knowledge to suggest that the Ministry of Finance and Development Planning unilaterally deconstructed the 2003/04 national budget after it had been approved by Parliament.

Furthermore, the action was taken having analyzed the nature of the budget and the likely effects on the services to be delivered to the people. It should be noted that the current budgetary system, especially recurrent expenditure, follows an incremental system that assumes inflationary increases in the size of recurrent budget for some items that cannot be fully justified in retrospect. We should also indicate that looking at past expenditure trends, under spending averaged 5 percent across ministries. Therefore, this informed the Minister’s decision to issue a withdrawal warrant to withdraw part of the remaining balance. This should not be seen as something which was out of the way but as a way of controlling the excessive unspent balances recorded in the past. Furthermore, Accounting Officers have the responsibility of reprioritizing their activities to ensure that critical services and projects are not affected by such moves as was undertaken.

In this regard, I should state that almost all ministries exercised control and restraint to ensure that their expenditures do not exceed the remaining balance in exception of two ministries of Health and State President. Despite the measures taken, the Ministry of Local Government, which provides for Old Age pension had an unspent balance of P27.9 million at the year end. It is, therefore, not true that as a result of the withdrawal, old age pensioners were negatively affected, as the paper seeks to imply.

Parastatals are required to declare dividends to government. For Government to have ensured that parastatals comply, was not strange, especially with the envisaged budget deficit, and should be seen as part of efforts by the Ministry of Finance and Development planning in prudent financial management. It would not be in the public interest and contrary to prudent financial management for this Ministry to allow parastatals to keep such dividends for sometime before paying to government, as this would mean loss of revenue to government due to forgone interest earnings, while at the other hand running budget deficits.

The Ministry remains open to provide information to the media, and we would urge you to request or check your stories before you publish them. This will assist both yourself and the Ministry by ensuring that the articles you publish are correct and show understanding of procedures and economic management.

Yours Faithfully
Maithamako Boraga-Lenyatso
(Principal Public Relations Officer)

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The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.