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Botswana Institute for Development Policy Analysis (BIDPA)

BIDPA Budget comments 2005/6

Budget Briefing 2005/6

Jay Salkin

Botswana Institute for Development Policy Analysis (BIDPA)

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The theme for the 2005 Budget Speech, "Meeting the Millennium Development Goals and Vision 2016 through a Self-Reliant Approach to Development", marked a reversion to themes that were emphasised in Botswana's earlier development periods, when Batswana were encouraged to do more for themselves, rather than depending upon government initiatives and handouts. The call for greater self-reliance reflected the growing awareness that not only were the Government's existing and prospective resources already stretched to the limit, but also that the dependency syndrome that had evolved over the past decade or so was becoming increasingly unsustainable. The Honourable Minister of Finance and Development Planning, while recognising that Government still has major roles to play in the economy, called upon all sections of society to take greater individual responsibility for their economic and social development. In addition, the Budget Speech theme served to signal to both the local and international community that while Botswana was committed to achieving the goals of the Millennium Declaration and its own Vision 2016, it was also committed to pursuing sound and sustainable financial management.

The 2005/06 Budget that the Minister presented on 7 February 2005 was fashioned against the numerous challenges that were facing the nation, including, inter alia:

  • the HIV/AIDS pandemic,
  • the slower growth in GDP,
  • the high and rising rate of unemployment, heavily concentrated amongst an increasingly educated youth,
  • the inadequate progress in diversifying the economy,
  • the high incidence of poverty, especially amongst the rural population,
  • the over-valued exchange rate1, which was eroding the competitiveness of domestic producers,
  • international fluctuations in exchange rates and mineral prices, which were making sound financial planning and budgeting difficult, and contributing to emerging large budget deficits.
In the face of those challenges, the Honourable Minister of Finance and Development Planning presented a basically balanced budget, expressing the commitment the Government has to living within its means, at least over a medium term horizon. The previous year.s budget estimates had also presented a basically balanced budget (a small surplus of P69 million was forecast); but, the revised estimates for 2004/05 now heralded a P1.4 billion defi cit, mainly due to revenue shortfalls from minerals ( P357m) and non-mineral income tax ( P486m) and higher than expected development expenditures (+P717m).

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