Experts unconcerned as deficits are decreasing
Although government has recorded three successive budget deficits for the first three years of the National Development Plan (NDP) 11, observers note that the deficits are decreasing.
On Monday, Minister of Finance and Economic Development, Dr. Thapelo Matsheka delivered his maiden budget speech, painting a picture of how the national cake will be shared for the 2020/2021 financial period.
According to Matsheka – who doubles as a Member of Parliament for Lobatse – his budget speech responded to the need to transform the economy to a high-income status.
He announced that a budget deficit – when spending exceeds income – of P5.22 billion is projected, which represents 2.4 percent of the nation’s Gross Domestic Product (GDP).
Matsheka noted this marks a significant drop from the 3.9 percent deficit forecast for the previous financial year.
“It represents the first step towards a healthier fiscal position,” declared the Minister.
Speaking to Voice Money shortly after Matsheka’s speech, Chief Economist at First National Bank Botswana (FNBB) Moatlhodi Sebabole confirmed it is evident deficits are dropping.
“It is clear deficits are going down, which is in line with government objectives to keep it at a bare minimum of 4 percent of the GDP,” said Sebabole, adding that another notable highlight was for government to see the economy ‘coming into the hands of the citizens’.
He further mentioned government’s intention to streamline State Owned Enterprises (SOEs) to align them with the transformation agenda.
At the moment there are over 60 SOEs, ranging from regulatory, through academic to commercial ones.
Created to achieve specific goals, Minister Matsheka noted that the poor performance of some of these enterprises indicates they have lost their direction over time.
Indeed, Sebabole feels government is going in the right direction by revisiting the mandates of these organisations.
“While the idea sounds good on paper, implementation will, however, remain key,” warned the Chief Economist.
For his part, FNBB Chief Executive Officer, Steven Bogatsu admitted he had anticipated the deficit to grow due to the rise in public service salaries introduced last year.
“If the Minister has managed to curb the budget deficit to about 2.4 percent, I think he has done very well to try to attempt to balance it,” praised Bogatsu.
He told Voice Entertainment it was also encouraging to note that the Minister has acknowledged the importance of Public Private Partnerships, particularly in the private sector.
Bogatsu also described the reduction of SOEs as a ‘welcome development.
In terms of priorities, the CEO feels the P8.56 billion allocated to the Ministry of Defence, Justice and Security was way more than necessary.
“So, I believe going forward there is still an opportunity to reduce allocation to defence and channel it to more pressing needs such as education and health,” stressed Bogatsu.
