Implementation pains in expansion budget
Minister of Finance, Peggy Serame presented an expansive budget; nevertheless, concerns persist within the nation regarding its execution, with worries of potential delays stemming from the absence of any mention of the Development Management Model.
However, there is optimism that Minister of Transport, Eric Molale will provide clarity during his Committee of Supply speech, elucidating the progress of the Development Management model projects, which are pivotal to both the current budget and the proposed budget for the next year. The prevailing sentiment suggests that without clear articulation, allocated funds may not yield tangible outcomes.
Experts and commentators, speaking anonymously, noted that the budget seemingly aimed to wrap up various aspects. As the ruling party nears the end of its five-year term and prepares for the upcoming election, there was an evident effort to conclude matters related to NDP 11 and its extension, serving as a transitional plan.
The budget reflects the status of Vision 2036, which has approximately 12 years remaining, portraying an endeavour to finalise various initiatives from multiple perspectives. This implies that there were numerous elements that needed inclusion in this budget, necessitating a substantial allocation towards development initiatives.
Observers recall that last year's budget was notably expansionary, with the developmental budget surpassing P20 billion. The expectation was for the Development Management Model to catalyse progress. While it may still be in the pipeline, the developmental budget has surged to P29 billion, indicating that packaged Development Management model projects may soon be implemented.
The undeniable truth is that implementation is inherently complex. While earmarking funds is straightforward, the speech failed to provide clarity on the current status of the Development Management model projects. Many projects were mentioned as recipients of funding or partial funding, but specifics regarding the scope of the Development Management model's involvement remain unclear.
For instance, in the 2023-24 budget, it was stated that roads like Francistown-Nata would be included in the Development Management model's portfolio. An update on the current status of these projects, including the appointment of project managers and progress made would have been good. This would justify proposed allocations for their completion in the upcoming fiscal year or for further advancement.
The experts contend that significant funds have been allocated for the conclusion of various endeavours, both from a political standpoint and as evidenced by financial documentation relating to transition processes and similar matters.
In terms of specifics, they note a continuation of government priorities, particularly in infrastructure, with a notable emphasis on water and sanitation. The ministry responsible for these sectors continues to receive substantial funding, indicating a successful area of government activity, with an aim to finalise ongoing projects.
Additionally, attention is drawn to the road network, where completed projects exist alongside newly-announced ones, promising enhancements to the country's transportation infrastructure upon implementation.
Energy infrastructure also receives attention, with the government maintaining its focus on providing enabling infrastructure for private sector growth. Allocations for such projects have either remained steady or increased compared to the previous year, reflecting a commitment to bolstering implementation capacity.
Infrastructure development is deemed crucial for enhancing the lives of Batswana, with access to necessities like water being paramount. Both physical infrastructure (the "hard part") and policy frameworks (the "soft part") are essential.
For instance, the establishment of Special Economic Zones (SEZAs) necessitates not only policy development but also robust infrastructure provision to ensure their success. Ignoring either aspect undermines the overall goal, as goods movement and economic activity rely on adequate infrastructure support.
They assert that the budget stands at P102 billion against a revenue of P93 billion, projecting a deficit of approximately P8 billion, which amounts to less than three percent of the GDP. From a microeconomic perspective, it appears to be an expansionary budget, yet not reckless, as budgetary prudence is typically assessed by the deficit as a percentage of the GDP.
However, it's crucial to recognise that this projected budget deficit hinges on assumptions regarding both revenue and expenditure.
Regarding expenditure, without efficient implementation, a significant portion of the allocated funds, including nearly P30 billion for development and P60 billion for recurrent expenses, may not be fully utilised. While
recurrent expenditure is generally easier to spend, ensuring effective implementation remains a challenge.
On the revenue side, a breakdown reveals that 26 percent is derived from the Southern African Customs Union (SACU), a portion considered relatively stable. Another quarter comes from mineral revenues, with the remainder stemming from non-mineral sources such as taxes.
However, the 25 percent derived from mineral revenue is subject to considerable risk factors, particularly amid recent challenges in the diamond market. Towards the latter part of 2023, the country encountered difficulties in diamond sales, signalling potential revenue uncertainties.
This January witnessed an improvement in sales, yet uncertainty looms over the diamond industry's full recovery, particularly amidst threats from G7 countries seeking certification of diamonds in Antwerp after complying with their respective protocols.
On the whole, there has been a noticeable enhancement in both export and import figures. The ban on vegetable imports has evidently contributed to this improvement, as Botswana had been grappling with a trade deficit with South Africa for some time due to substantial spending on vegetable imports.
Government cash balances have decreased compared to last year, suggesting a need for vigilant monitoring, especially considering the potential impact of diamond sales on revenue inflows.
Close scrutiny of the budget parameters is imperative, with hopes that the established Management Accounts will facilitate close monitoring of developments.