COVID-related spending pushes Botswana’s budget deficit to 5.1%


Buildings are seen in the central business district (CBD) in the capital Gaborone, Botswana September 21, 2018. REUTERS/Siphiwe Sibeko

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GABORONE, Feb 7 (Reuters) – Botswana‘s 2021/22 budget deficit has widened to 5.1% of GDP as the country uses funds to finance its recovery from the COVID-19 pandemic, the government said on Monday. Finance Minister Peggy Serame, adding however the rebound in the economy remained strong.

While the P10.1 billion ($869 million) deficit was lower than the P16 billion seen in 2020, it was larger than an earlier estimate of 3.7 percent made last year.

“The government will incur another budget deficit this year to support economic recovery,” Serame said in his annual budget speech.

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“The economic recovery continues to be strong, supported by a successful vaccination campaign,” she continued, adding, however, that there were risks to the outlook, such as the emergence of new coronavirus variants.

The country forecasts economic growth of 9.7% in 2021 and 4.3% in 2022. The deficit is expected to fall to P6.98 billion or 3.2% of GDP in 2022/23.

Serame has proposed a significant reduction in recurrent spending, such as a reduction in the wage bill, to manage the 2022 deficit, although overall spending will increase slightly as the government increases funding for new and existing infrastructure.

Revenues, which are driven by diamond sales, are expected to rise from P63.4 billion in 2021/22 to P67.8 billion the following year.

($1 = 11.6279 pula)

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Reporting by Brian Benza; Written by Emma Rumney; Editing by Toby Chopra and Alison Williams

Our standards: The Thomson Reuters Trust Principles.

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