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