- Identifies weak implementation of programmes and projects as a problem
GAZETTE REPORTER
Botswana’s economy needs deep structural reforms to achieve growth and transformation, the Minister of Finance and Economic Development, Peggy Serame, said when delivering the 2022 Budget Speech this earlier this week.
She noted that the structural reforms needed to increase the growth rate, boost job creation, improve productivity and reduce poverty and inequality were prioritised for the second half of NDP 11 and beyond.
NDP 11 is the first medium-term plan towards the implementation of Vision 2036 and will run from 1st April 2017 to 31st March 2023.
“The reform agenda has to some extent been disrupted by COVID-19, but the need to implement these structural reforms remains critical,” Serame said. “Our economy continues to have a narrow export base, which must be diversified and expanded.
“We have an external imbalance, with more imports than exports, resulting in persistent balance of payment deficits. Our fiscal revenue base remains concentrated on external sources, from minerals and SACU, with inadequate domestic revenue mobilisation and high levels of spending, and structural budget deficits.”
As a result, she observed, the country’s economy has “twin deficits” that are of great concern because they are not sustainable. “In addition, there is still weak implementation of programmes and projects,” she said.
“Examples include the lengthy delays with the restructuring and privatisation of Air Botswana and the Botswana Meat Commission, which have long been agreed but the results are unsatisfactory and not much has been achieved. It is, therefore, critical to strengthen accountability within government for the implementation of agreed policies.”
Botswana’s first female finance minister of after more than five decades of independence stated that the first half of NDP 11 was, by current standards, “business as usual”.
“The first half of the Plan period was reasonably robust, averaging 4 percent a year, in line with projections,” Serame said. “However, this was not sufficient to create enough employment opportunities for the growing labour force. Consequently, unemployment rose from 17.5 percent in 2015/16 to 23.2 percent in the first quarter of 2020, which marked the end of the first half of NDP 11.”
The second half of NDP 11 was dominated by the economic impact of COVID-19. This, Serame said, had a dramatic impact on GDP growth despite a range of measures implemented by the government through the short-term Economic Stabilisation Package in the first half of 2020 and the Economic Recovery and Transformation Plan (ERTP).
“Economic growth in 2020 was minus 8.5 percent while robust recovery of 9.7 percent growth is being estimated for 2021,” she stated. “Over the two years, therefore, overall growth was approximately zero. “Unemployment rose to 26.0 percent in the fourth quarter of 2021, up from 22.2 percent in the fourth quarter of 2019, before the pandemic. COVID-19 had a huge fiscal impact, resulting in large budget deficits.
“These are now forecast to total P26.6 billion over the 2020/2021 and 2021/2022 financial years, compared to a surplus of P7.9 billion originally projected in NDP. Inevitably, this had to be funded by a combination of drawdowns from the accumulated savings in the Government Investment Account (GIA) and additional borrowing from domestic and external sources.”