Government is dead broke
Botswana’s economy is on its knees, forcing the government to suspend the generation of Government Purchase Order (GPO) from its Accounting and Budgeting System (GABS).
The Umbrella for Democratic Change (UDC) government finds itself at the crossroads to close leakages, stabilise the economy, and deliver the promises it made to Batswana before the October 2024 general elections.
A savinggram from the Permanent Secretary in the Finance Ministry, Dr Tshokologo Kganetsano, to all ministries and government departments sends a chilling message about the liquidity challenges faced by the administration.
Dr Kganetsano informed the Accounting Officers that the Finance Ministry has decided to suspend the generation of GPOs from GABS due to the current liquidity challenges faced by the government.
The challenges, he said, are due to the continued significant decline in revenue inflows, which to a large extent are caused by the decrease in diamond sales, which have been the main source of
revenue for the government.
“Based on the current situation, the government is therefore compelled to take immediate action that requires concerted effort across all ministries, Departments, and Agencies (MDAs) to ensure financial stability and sustainability.
Furthermore, despite the decreased revenue inflows, public expenditure has, on the other hand, increased, thus exacerbating the situation”, he said in the Savingram.
According to Dr Kganetsano, while the Ministry of Finance has been steadfast in cautioning MDAs on their spending given the current financial situation, MDAs continue to commit the government to more financial obligations.
Borrowing by the government to cover running costs or non-revenue generating projects is not sustainable and, therefore, not a solution to the current liquidity challenges.
“The Ministry has taken note of the recent loan proceeds from BPOPF and Bank of Botswana amounting to P8.3 billion that were channelled towards, amongst others, payment of salaries, social benefits allowances, student tuition fees, repayment of public debt, resulting in the funds being depleted within a week.
Ideally, these funds should have been directed towards development project with the capacity to create jobs and generate more income”, Dr Kganetsano said.
It was on this basis that a decision was taken to suspend the online generation of GPOs from the 14th July to 31st July 2025.
During this period, MDAs will not be allowed to process or submit manual GPOs. The ministry will only make consideration on exceptional cases.
The Minister of Finance, Ndaba Gaolathe, stated that the GPO process was done mainly for expenditures that were believed not to need tendering. They were generated automatically online.
“It was a big area for abuse. The generation of GPOs automatically was such a black hole. It accumulates so much money used by government, yet no one can account for what it was used for. We are putting systems in place; accounting officers should have sight of what is happening well in time. It is a momentary step”, explained Gaolathe, when giving assurance to fix the mess.
According to the minister, the whole financial accounting process and systems of the country are being properly done. He revealed that they have involved partner institutions like the African Development Bank to assist.
“We want real-time sight, that is where we are going, and Applications of AI. A lot of things are happening in government and are not being done right. We are stabilising our system. There are too many leakages which were not good for the economy, and we will stop that”, Gaolathe, who is also the Vice President of the country, said.
Gaolathe last week told Parliament that the fiscal position remains under significant pressure. He indicated that Government revenues have been severely constrained, driven largely by the sharp downturn in diamond sales, “our primary export and revenue source.”
“As a result, we are experiencing delays in the processing of invoices, including payments to suppliers. These delays are not a reflection of unwillingness, but of a stark reality, we are operating in a constrained fiscal environment that demands urgent and disciplined financial management,' he said, adding that in recent months, the government has become heavily reliant on quarterly disbursements from the SACU Revenue Pool to keep the fiscal engine running.
This dependency, according to him, is deeply concerning. 'It is neither stable nor sustainable, especially if government spending continues at its recent trajectory. We are now confronting a widening mismatch between what we earn and what we spend.'