This edition of the BIDPA Briefing discusses the 2006/07 budget speech. It attempts to establish whether the Budget Speech is growth promoting, which is a requirement for achieving the Budget theme. While we conclude that the Budget is indeed growth promoting, we also note that there is still need for further reform for the budget to fully deliver on its potential.
The total proposed budget for expenditure and net lending in 2006/07 is P22.4 billion. The expenditure, including an 8% across the board salary hike, will be financed through revenue forecast at P24.14 billion, of which 47.0% is mineral revenues. This shows Botswana's continued reliance on mineral revenues. Other major sources of revenue are customs and excise (22 percent), non-mineral taxes (12 percent) and the Value Added Tax (9 percent). The budget, after taking into account the salary increase and changes in taxes, forecasts a surplus of P922.5 million. However, the surplus could easily swing around due to the uncertainties inherent in mineral revenues, which are subject to unexpected changes in both mineral prices and demand conditions.