Gaborone Central Member of Parliament, Dumelang Saleshando, last week 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, and criticised it for failing to put citizen-owned companies first in awarding tenders for local development projects.
Saleshando was commenting on the Kasane Airport Expansion loan authorization Bill.
The Kasane Airport expansion project is aimed at rehabilitating and developing the airport through, among others, extension and widening of the runway, refurbishment of the terminal building to cater for the expected increase in aircraft, and erection of additional parking areas for aircraft.
Presenting the bill, Finance Minister Baledzi Gaolathe said that the cost of the whole project would be some P180 million, which would be provided for by the government of Botswana, OPEC Fund for International Development (OFID) and Arab Bank for Economic Development in Africa (BADEA).
Gaolathe proposed that the government raises a loan of US $10 million from OFID while an additional US $8 million has been pledged by BADEA. The OFID loan would be paid back within 14 years with a grace period of 4 years.
Commenting on the bill, Saleshando decried the fact that parliament is not availed the finer details of the loan agreements that government makes with international financial organizations to enable it to better undertake its oversight mandate.
“It is pertinent that parliament is provided with the finer details of the loan agreement so that it is better able to exercise its monitoring and oversight role,” he said.
He added that it is important for government to ensure that parliament is provided with the proper guidelines that government has put in place to enable it to manage loans for development projects.
“It is important for government to be wary of wanton and unlimited borrowing which, if unchecked, will only lead us to fall into the traps faced by other countries, which used to enjoy unlimited access to finance, only to find themselves unable to pay back the loans that they enjoyed,” he said.
Saleshando also said that it is important that government instils a sense of financial prudence into its populace through rigorous financial discipline, which will not be helped by wanton borrowing.
It was at this point that Finance Minister Baledzi Gaolathe interjected to clarify that debt arises because of a budget deficit, and therefore there is no way government would borrow wantonly, as Saleshando suggested, if there is no deficit.
Gaolathe also said that parliament has approved parameters which guide government’s borrowing practices, one of which is that government debt cannot, at any point in time, exceed 20% of GDP.
“The loan services ratio should, over the long term, not exceed 5%. At the same time, government has a debt monitoring unit within the Ministry of Finance, which also guards against government exceeding the set limits,” said Gaolathe.
Parliamentary legal counsel, Lizo Ngcongco, interjected and said, “Section 10:2 of the Finance and Audit Act also dictates that government debt shall not, at any point in time, exceed 5% of government revenue.”
Minerals Energy and Water Resources Minister, Ponatshego Kedikilwe, also added that government has measures, like, for example, the public debt expenditure fund, through which it keeps track of government debt and expenditure.
But Saleshando remained resilient, saying that it is imperative for the Finance Minister to explain government’s credit rating whenever a decision is made to borrow more money.
“The minister should always tell parliament how far government is from the 5% threshold,” he said.
Saleshando also expressed his displeasure with a certain clause which he said gives the Finance Minister powers to withdraw information from parliament, and provide parliament with only information that he deems appropriate for them to know about the loan details.
“This is an affront to the principle of oversight. How do you expect parliament to monitor government excesses when you have clauses that give the minister carte blanche to decide what or what not to avail to them?” he asked.
Saleshando also decried government’s continued ignorance of the principle of citizen economic empowerment. He said that government has, in the past, been sweet talked into supposedly low interest loans by foreign nations, which loans unfortunately had a catch as they were binding to government to award the particular country’s companies the projects.
“It has come to our attention that while government maintains that these are open tenders, very limited, if any, local companies have benefited from them. What has transpired is that international corporations from these funding countries are the ones that benefit from local development projects. This is unacceptable,” he said.
On numerous occasions, BDP MPs interjected arguing that the tender system has proven to be very successful over the years and asked Saleshando to suggest an alternative, while some accused him of digressing and straying from the issue at hand.
But Saleshando maintained that it is the responsibility of government to ensure that national development projects should add value to the life of the simple man and have trickle down effects.
Saleshando also suggested that government should be more vigilant in sourcing funds from locally available sources which, while expensive in the short term, will be of immense benefit to local economic development in the long term.