Ndaba’s economic recovery plan

Vice President Ndaba Gaolathe has reiterated that the 2025/26 budget which marks the first ever budget of the newly elected Umbrella for Democratic Change (UDC) administration is putting emphasized on rebuilding the economy as well ensuring prudent use of the government monies. Ndaba – a highly experienced economist and strategist who serves as Minister of Finance – has emphasized the importance of rebuilding the economy during his series of Budget Pitso consultative forums with diverse stakeholders in the economy. 

Addressing Stakeholders Budget Pitso on Thursday, Gaolathe said the government is keen on rebuilding the economy. 

“We are focused on ensuring that there is robust fiscal consolidation. There is a need to ensure that the entire government system is functioning in our effort to build a resilient economy and rise again,” he said. 

Gaolathe emphasized that prudent policy decisions will have to be made to stabilise the budget to achieve efficient economic recovery. He said the ministry will focus on developing sustainable financial assets to restore Government Investment Account (GIA). 

The nation’s expectation is that Gaolathe’s budget presentation scheduled for 10 February 2025 will show how UDC would meet its manifesto pledges such as the P1800 old age pension, P2500 tertiary education student allowances and P4000 living wage, amongst others. 

NUMBERS 

The Director for Macroeconomic Policy at the Ministry of Finance Walter Matekane said the government debt as of September 2024 stood at P27.2 billion to external lenders and P43.2 billion to the domestic borrowers. 

This, he said, calls for a tight and fiscal consolidation with government now supposed to focus on reducing expenditure and save money. According to Matekane, in September 2024, total revenues and grants collected stood at P34.67 billion while total expenditure and net lending stood at P38.87 billion. 

“As at October, 2024 reserves stood at P56.1 billion compared to P64.9 billion in the same month in 2023. This was due to reduced inflows from diamond receipts, weak global demand and low export earnings,” said Matekane. 

Matekane said the 2025/26 financial budget is expected to carry P11.4 billion while the

current financial year ending 31st March 2025 is expected to show a shortfall of P18.6 billion.

He said Botswana only managed to hold five sight holders with regards to diamonds narrowing from 10 annual sight holders, adding that the total volume of diamonds sales reduced by 20%; hence decline in government revenues. 

BURS 

As part of driving growth, Gaolathe said the ministry of finance is going to put lot of pressure on the Botswana Unified Revenue Service (BURS) to strengthen tax collection and close collection leakages. 

According to him, the budget would not be secured without the full performance of BURS to collect taxes, adding that government would ensure that BURS has the capacity to collect by investing on necessary enabling infrastructure or technology. 

“There are gaps in our collections and we are aiming to collect every pula from every tax liable business. We are not collecting well with regards to online taxes. This is where BURS needs to strengthen screws and ensure that these billions of Pula that we are missing are recovered,” said the optimistic Gaolathe. 

Additionally, Gaolathe said the government will be going after some businesses that are found to be circumventing taxes, buttressing that there is no choice not to go after those businesses to pay taxes. 

BURS has been given a target to collect P70 billion during the current financial year 2024/25 ending 31st March 2025 and it would be seen if the new UDC administration will increase the tax collection figures for the financial year 2025/26. 

CORRUPTION 

He said government will strengthen capacity to fight corruption which significantly affect the performance and agility of the government system, saying corruption has to be fought from all angles – from the top to the bottom. 

“In the new Botswana that we envisage to build, there would be no under table dealings. Much can be said but I can promise you that in the new Botswana we will be exemplary. We will fight corruption to the bitter end,” said Gaolathe. 

GROWTH AREAS 

He said there is a crucial need to harness the internet connectivity and digitalisation initiatives in the Information and Communication Technology (ICT) sector.  He said the ICT sector present opportunities for the young people to

unlock the country’s inherent energy and innovation that remain untapped, adding that the creative sector also has potential to create jobs. According to Gaolathe, the COVID-19 pandemic has shown the nation the importance of digital resilience as business connectivity blossomed during the period as service delivery continued without disruption. 

“Some of the best performing companies and most innovative companies in the world were founded during period of recession and hardships, so something good must come out of the circumstances that we face today,” he said. 

He added: “We shall rise again despite the economic circumstances that we find ourselves in at the moment. Young men and women roaming the streets due to unemployment shall rise and dream again.” 

STRATEGY PAPER 

Meanwhile, the ministry of finance said on the 2025/26 draft Budget Strategy Paper that the 2025/26 budget priorities are aligned to the national priorities identified in the National Transformation Strategy (NTS) and has also taken into account the priorities of the New Administration. 

According to the NTS, the priority sectors include mining, tourism, agriculture, manufacturing, trade, sport and creative industries, transport and logistics, finance, real estate and business services. 

The proposed budget priorities for 2025/2026 include: Building an Inclusive Economy; Improving Quality of Life; Modernising and Transforming Infrastructure; and Digital Transformation. The ministry also said in the 2025/2026 financial year, total Revenues and Grants are projected at P85.4 billion. 

“Specifically, mineral revenues are expected to reach P17.2 billion. SACU receipts are anticipated to decline to P23.3 billion from the P26.7 billion projected in the 2024/2025 financial year,” it said. 

Meanwhile, the revenue income from Bank of Botswana is projected at P700 million over the coming year in line with expected pre-set dividend income from Government savings invested in global financial markets. 

On the other hand, total expenditure and net lending is estimated at P96.7 billion. Out of this, Recurrent expenditure is expected to reach P71.8 billion while development expenditure is estimated at P25.1 billion, in line with the start of the new planning period for NDP 12. 

“Overall, the budget deficit is anticipated to narrow to P11.3 billion (3.6 percent of GDP) in the 2025/2026 financial year. This deficit is expected to be financed by different sources including domestic and external borrowing, with little drawdown on the GIA,” the ministry buttressed.