The Minister of Finance and Economic Development Dr Thapelo Matsheka is concerned by the skyrocketing budget deficit which is estimated to reach P13 billion amidst slow recovery in domestic economy.
Dr Matsheka, who leads a pivotal ministry tasked with spearheading comprehensive revival of the economy shuttered by COVID-19 pandemic, has regretted the skyrocketing deficit.
Giving the domestic economic update and analysis of President Dr Mokgweetsi Masisi’s State of Nation Address, he said the deficit is projected to grow from P5 billion to 13 billion in the next financial year.
Consequently, to mitigate against the impact of OVID-19 on the economy Matsheka said the government has injected P1.3 billion supplementary budget to stimulate domestic economy.
He said the money was channeled into the COVID-19 Relief Fund to support the various sectors of economy such as agriculture, tourism, general sectors and the informal sector too.
“This industry support fund’s core purpose is to keep the businesses running. The economy is yet to recover where we had anticipated it will be by now. P100 million is set aside to aid the informal sector. Only registered businesses are liable to benefit,” he said.
Matsheka said Local Enterprise Authority (LEA) is managing the informal sector stimulus package. He added that P100 million is reserved for the agriculture sector and P200 million for tourism.
According to the minister, the tourism and mining sectors have emerged as the most hard-hit by the COVID-19 pandemic conceding that the sluggish recovery on both sectors led to a huge GDP fall.
“The midterm review of NDP 11 and Economic Recovery Transformation Plan (ERTP) are two instruments that government is banking on to keep domestic economy running. The belief is that the money that is disbursed is used in prudent manner in a bid to avoid crisis,” he added.
For the large scale businesses, Botswana Development Corporation (BDC) has been tasked with distributing loans with P25 million being a maximum threshold from the P300 million package. The ERTP is to help reduce impact of Covid-19 in domestic economy, with the Q2 GDP contracting 24%.
CEDA has put aside money to inject into the economy.
“P300 million is given to CEDA, and is not part of CEDA loaning. It is not going to the startups. It is for businesses that are operational. A company does not have to be CEDA client to be funded,” said Matsheka.
President Masisi said the domestic economy is expected to contract by 8.9 percent in 2020, due to expected sharp drop in major sectors such as mining that fell by 24.5 percent. He said the COVID-19 containment measures have the effect of reducing spending by firms and households causing supply-chain disruptions.