Monday, January 24, 2022

Walking in Matambo’s 2016/17 budget speech shoes

In week’s time, Finance Minister Kenneth Matambo will probably wish to convey the harsh realities that the economy is facing. His speech will certainly not be an apocalyptic depiction of the economy, but will demonstrate its insistent heavy tussles. 

Just like in previous years, Matambo will start first by explaining the effects of the global economy on the local economy, which given what is currently happening will dampen the mood of his speech. What he will seek to put forward is that the demographic location of any country doesn’t make it immune to the global problems.

This delicate connection is what weaves the global economy, and Botswana as with the rest of the countries, is as much part of that global economy. The world’s hegemony being the US is experiencing a rise in its interest rates, causing a threat to emerging markets because it is starting to appear a better environment to invest in. China is battling a stock market tumble and a significant economic slowdown hence affecting its demand for outside goods and services. South Africa is at the mercy of a plummeting currency value, which makes its trading vulnerable to price hikes. These and other significant events are examples Matambo will likely use to cite how Botswana has been affected by the global meltdown.

Diamond sales and prices of commodities such as copper, nickel ore are in a slump. Out of this strain that Botswana is under, Matambo will cite this weakness as the reason Botswana is experiencing a volatility in its growth prospects. He will mention that the economy is therefore at risk of not achieving meaningful growth in 2016, following which he will give a paltry growth estimate, perhaps nothing more than 3 percent. 

Regardless of the challenges he would have acknowledged in the global economy, he will then exude confidence in assuring his audience that the government will not falter in its commitment to grow and diversify the economy. Diversification and growth have from past budget speeches emerged as Botswana’s top two priorities. Unfortunately Matambo will remind his audience that due to the low demand of its commodity products (diamonds, copper, and nickel ore) Botswana fell short of its expected revenue collection.

. He will use that to explain why the government will as a result fail to meet all of its economic needs and its focus therefore will be on other projects. But this is where Matambo will look intently into his audience’s eyes as if to alert them that they should not lose heart because government will save the day. This is when he will announce the grand Economic Stimulus package (ESP) with a look of pride in his eyes. With a voice more confident than when he started, he will announce new mega projects and also make it known that certain projects that had been regressed by tough times will be resuscitated. At this point, he expects a positive response from his audience; ‘once again government has come to the rescue’, he wants to say but his look does the talking instead. 

Matambo will reiterate government’s tight spending position that more will be achieved with less. He will then continue to highlight that a massive number of jobs will be created, but will not give specifics. Matambo will ask private sector to actively help government in achieving inclusive growth but also act oblivious to the fact that the business reforms which private sector has long implored government to put in place have not yet come into action. He will take the opportunity to inform the audience that unemployment, income inequality and poverty are the vices of society which threaten the development of the country, something he will assure them that government is cognisant of and is working earnestly to combat. 

It is going to get worse before it gets better, but Matambo will not bluntly admit it. Critics are of view that no amount of decisive action that government takes will substitute the need for government to actively address underlying issues. Such issues entail competitiveness, export diversification, as well as private capital attraction to the domestic economy. 

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