The budget speech which was presented on Monday by the Minister of Finance and Development Planning Kenneth Matambo showing a P6 billion deficit has many factors both internal and external that led to the shortfall, experts said on Tuesday. A panel of experts who spoke during the FNBB 2016 Budget review pointed to varying factors that have a direct bearing on the budget.
John Cairns, a Currency Strategist at Rand Merchant Bank, said declining commodity prices have direct implications on Botswana as the country is a major commodity exporter. He said the decline in commodity prices is not a challenge exclusive only to Botswana, but to the majority of African nations.
Cairns said as a result of the decline, the African growth history will be challenged and less Foreign Direct Investment (FDI) is expected into the continent.
He said other factors causing current fears in the global market are the struggling equity markets as well as the slow economic growth in South Africa with inflation rising in that country. He said challenges faced by South Africa are likely to spill into Botswana either directly or indirectly. Cairns said just like Botswana, South Africa is facing a drought which is expected to impact on food prices.
For his part, Secretary for Economic Affairs at Ministry of Finance, Dr Taufila Nyamadzabo said the local economy has been affected by rebalancing of the Chinese economy. Nyamadzabo said Botswana’s two leading sources of revenue- mineral and SACU revenues are mostly affected by external shocks, hence their decrease.
In the case of the SACU receipts, Nyamadzabo said all member states have been affected and for Botswana the situation is made worse by the exchange rate due to the appreciation of the Pula against the Rand, resulting in less revenue.