Doing more with less
With the upcoming budget speech announcement, some reflections remain fundamental on how Botswana has fared following the economic and financial crises of 2007/08. There is no doubt that the economy still remains on a fragile recovery path since the major economies for its major export commodities remain with challenging growth prospects grappling with huge public debt. The public debt situation affects the purchasing power of developed countries which translates into lower demand for developing country exports in general.
The global economy though with signs for positive turnaround with a positive outlook is a good development. However, it is clear that growth rates will take time to return to the witnessed pre crises high growth rates. In Botswana, output growth slowed down from about 6 percent in 2011 to about 4 percent in 2012, 2013 and 2014. This is a concern since the attainment of key objectives set out in the Vision 2016, Millennium Development Goals and NDP10 require higher growth rates so that Botswana can make progress on the creation of employment opportunities, make significant strides in eradicating poverty and building a solid diversified enterprising competitive economy with broad based growth.
The 2014 Budget unfolds in a period where growth still remains weak and uncertain given the huge debt accumulated in the developed world economy resulting in subdued growth. A key question is also that given the tight fiscal space at the disposal of government, to what extent can the resource allocations make significant contributions to escalate growth and development beyond what is and beyond. This is also in cognisance of some delays in project implementation for some NDP 10 projects.
While in the pursuit of a development agenda with the resource allocation process, caution has to be exercised in ensuring that expenditure priorities are informed by the prevailing economic challenges and the limited resources are allocated only to the most important growth enhancing economic activities/projects so that there is scope to rebuild national savings and resources from now onwards.
Attaining fiscal prudence and sustainability in such a tight fiscal space therefore requires efficiency in spending, selectivity of projects that offer high returns to enhance the growth and revenue potential and prioritisation to ensure that what is spent will spur the growth objectives of employment creation, poverty eradication and providing a conducive environment to continue to attain progress on diversification.
My expectations in line with national economic challenges are that resources will be channeled to some poverty eradication and livelihood programmes to support ongoing efforts to address poverty as a national challenge. This will also serve to propel some achievements for the not so distant Vision 2016 time horizon and MDG. Given the high unemployment rate, particularly among the youth, we are likely to see some funds being devoted to youth employment and empowerment programmes. Diversification remains a national priority focus and in this case some resources to support the ongoing reform process to enhance Botswana business and private sector would be given prominence. I believe that human capital development would continue to dominate some resource allocations since it remains key to unlocking Botswana’s competitiveness and growth potential. This is related to factors and initiatives that can promote efficiency in service delivery and work ethics or productivity.
Some sectors such as the power and energy sector would attract resource allocations given the prevalent challenges in the delivery of power and water shortages. These are key for the normal functioning of the productive and business sectors of the economy including a smooth operation of the government sector which can cripple service delivery and the production process and ultimately impact adversely on GDP performance.
* Dr Tabengwa is a Fellow and Macroeconomist at BIDPA
