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Delivered to the National Assembly on the 9th February, 2004

By Honourable B. Gaolathe, Minister of Finance and Development Planning

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  1. Mr. Speaker, I have the honour this afternoon to present to this Honourable House budget proposals for the financial year 2004/2005.

  2. The theme for this year’s Budget Speech is “Improving Economic Performance: A Vehicle for Sustainable and Diversified Development,” which is derived from that of the ninth National Development Plan (NDP 9). The choice of this theme is an illustration that our annual budgets are made within the context of the National Development Plans, in the medium term, and indeed, the long term planning framework of Vision 2016. One of the most critical challenges in attaining the objectives of NDP 9, Vision 2016 and the United Nations’ Millennium Development Goals is simply to improve economic performance.

  3. Mr. Speaker, as this is the last budget to be considered by the present Parliament, it is worth reviewing, briefly, economic progress achieved since this Parliament was elected in 1999. Real GDP growth has averaged over 6 percent per annum. Government’s budget has also grown. Expenditure and net lending was P 9.1 billion or 42 percent of GDP in 1998/99 financial year, and the revised estimate for 2003/2004 is P16.20 billion, which is 44 percent of GDP. Government has been able to expand the physical and social infrastructure, such as roads, schools, water, sanitation, and health services, while maintaining social safety nets for the more vulnerable members of our society. The forth coming Parliament will, therefore, have a solid base on which to propel the socio-economic development of Botswana to greater heights. NDP 9 envisions a continued enhancement and renewal of the facilities and services provided by Government. However, achievement of the goals of NDP 9 will be dependent on the ongoing success of the economy. It is for this reason that we must focus on improving economic performance.

  4. NDP 9 contains financial and manpower ceilings allocated to Ministries over the Plan period, 2003/2004 to 2008/2009. These are derived from the projected revenues, which, in turn, rest on expectations about the performance of the economy over the Plan period. If the performance of the economy does not meet those expectations, then the financial and manpower allocations to Ministries in the Plan cannot be made available. It is, therefore, imperative that all stakeholders, from both the public and private sectors should contribute meaningfully towards improved performance of the economy.

  5. Mr. Speaker, improved economic performance need not only come from increasing Government spending. Many improvements in productivity can come from actions as simple as removing bottlenecks that affect the day-to-day lives of Batswana and devising low cost ways to do so. Other improvements in productivity can come from a careful costbenefit analysis of every development project in the Plan to ensure that those projects and programmes that will add value to the economy are given priority. Government continues to undertake productivity improvement measures in the public sector. The application of the Performance Management System (PMS), the introduction of decentralisation and computerisation of the personnel management system, are some of the reforms aimed at enhancing performance and improving productivity within the public service.

  6. A similar focus on improving economic performance is also required for the parastatal sector. To this end, the over-riding goal of the Privatisation Policy for Botswana is efficiency enhancement of public enterprises. In addition, the review of the Revised National Policy on Incomes, Employment, Prices and Profits of 1990, which was launched in November 2003, will also contribute towards formulation of a strategy for improved performance of the parastatal sector, and hence the whole economy.

  7. Mr. Speaker, another avenue for improving Botswana’s economic performance is increased integration with the international economy. The renegotiated Southern African Customs Union Agreement (SACUA), and the ratification of the Southern African Development Community (SADC) Trade Protocol are intended to achieve this at the regional level. Access to major international markets enables Botswana producers to achieve economies of scale that are simply not possible in our small domestic market. The opportunities provided under international trade arrangements that are already in place are significant for the domestic exporters. These include the African Growth and Opportunities Act (AGOA) of the USA and the Cotonou Agreement between the European Union (EU) and the African, Caribbean and Pacific (ACP) countries. But, these arrangements are time limited. For this reason, Botswana is actively participating in negotiations aimed at achieving permanent access to major international markets through the proposed SACU-USA free trade agreement and a new regional Economic Partnership Agreement (EPA) with the EU.

  8. Mr. Speaker, Government successfully floated a series of medium and long term domestic bonds during 2003, with a view to developing the domestic capital market. These bonds will be listed on the Botswana Stock Exchange during the first half of 2004. In addition, the Public Debt Service Fund (PDSF) loan book is being sold to the private sector, also as part of Government’s effort to develop the capital market. In future, parastatals will be expected to source some of their funds from the capital market. A further major step in the development of the domestic financial market is that Government will consider, during 2004, the feasibility of establishing a financial services regulatory authority to regulate and oversee non-bank financial institutions, in view of the phenomenal growth of this sector over the past few years.

  9. It is pleasing, Mr. Speaker, to note that sovereign credit ratings continue to place Botswana ahead of many developing countries, which reflect the strong external position of the country and the pursuit of a development strategy that has successfully balanced the provision of social services with prudent fiscal and monetary management over the years. The ratings enhance Botswana’s international stature and ability to attract foreign capital to support the process of economic development. It is, therefore, important that these ratings are maintained by improving economic performance and maintaining prudent economic management.

  10. Mr. Speaker, our continued economic performance depends on the productivity of the factors of production, including labour. Yet the HIV/AIDS pandemic and the carnage on our roads do not only threaten the productivity of this important factor of production, but also its existence. It is vital, therefore, that measures continue to be implemented to ensure that the HIV/AIDS pandemic and road accidents do not compromise the country’s effort to achieve improved performance. In order to ensure that Batswana of the next generation are offered the same opportunities that are open to the current generation, it is essential to focus on this fundamental challenge.

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