The Minister of Finance and Economic Development, Kenneth Matambo, will deliver the 2018 budget speech tomorrow (Monday) with likely no major changes to what has been outlined in the Budget Strategy Paper (BSP). The 2018/19 financial year will be the second year in the implementation of the National Development plan (NDP) 11 as well as the last year for the Economic Stimulus Programme (ESP) which was announced in 2015 by President Ian Khama. A report from Econsult firm authored by Keith Jefferis and Sethunya Sejoe, which was released this week, indicates that the outline of the budget message having been already presented in the BSP in September 2017 and hence no major surprises are expected. The report, which is for the last quarter of the 2017, says the relatively beneficial budget data will give the minister a breathing space. Jefferis and his colleague say economic prospects for the year 2018 remain mixed, reflecting both international economic uncertainty as well as domestic issues. The report suggests that economic growth for the year should be reasonable given the likelihood of increased diamond production, as long as the international market remains stable. “However, as is well known in Botswana, diamond mining creates relatively few jobs directly, and the challenge remains to support other economic activities, notably those producing exports of goods and services, which is the only sustainable source of long-term job creation,” the report says.
The upcoming budget speech will be the last under President Khama who vacates office on at the end of next month with Vice President Mokgweetsi Masisi taking over on April 1. Last week a Research Manager at FNBB, Moatlhodi Sebabole, told The Patriot on Sunday that the expectation is that the coming budget will be expansionary in that spending is likely to increase with a large amount of money going towards social spending. He said social expenditure is likely to increase as the new president might come up with programmes as he seeks to make himself popular with the citizens, adding that with the general elections approaching next year, which will also be a factor that will contribute towards expenditure. Sebabole said government revenue is expected to be boosted by prospects of improvement in diamond sales which will see government raking in more royalties and taxes as global prospects are improving. According to the BSP, the proposed 2018/19 budget allocations amount to P66.87 billion, representing an increase of 7.1 percent from the current year’s revised budget of P62.42 billion.
Of the proposed total expenditure; P48.98 billion or 73.2 percent of the total is proposed for recurrent expenditure mainly to cover personal emoluments and pensions and gratuities (P23.73 billion) and subventions to state-owned enterprises, Local Authorities in the form of revenue support grants. The remaining balance of P17.97 billion of the total proposed is proposed for the development expenditure. The amount proposed under development budget is expected to cover, first and foremost, on-going projects and programmes and the balance can be used for new projects as set out in the NDP 11. With estimated total revenues and grants of P58.81 billion and proposed total expenditure and net lending of P66.87 billion for 2018/19, the overall budget balance points to a deficit of P8.06 billion, or minus 4.0 percent of GDP.