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- Madam Speaker, I have the honour this afternoon to present to the National Assembly budget proposals for the 2010/11 financial year.
- Madam Speaker, allow me to take this opportunity to express gratitude to my predecessor, Honourable Baledzi Gaolathe, for his skilful leadership, foresight, and strong sense of purpose in leading the Ministry of Finance and Development Planning for the past 10 years. We are all aware of the significant strides our economy has made in terms of economic growth, employment creation, diversification and poverty reduction, just to mention a few. Honourable Gaolathe’s leadership contributed in no small way to these favourable outcomes. Our stakeholders, development partners, and staff of my Ministry, will always appreciate his years of leadership.
- The theme I have chosen for the 2010/11 Budget Speech is “Transforming our Economy after the Crisis: 2010 and Beyond”. This theme recognises that, due to the recent global financial and economic crisis, Botswana experienced an unprecedented loss of national income. Global demand plunged, particularly for luxury goods such as diamonds, and so did Government revenue that we use to finance development initiatives. The crisis therefore threatens to stall the hard earned progress that we have made towards achieving the aspirations of Vision 2016 as well as the Millennium Development Goals.
- This theme challenges us to find strategies to resume rapid economic growth, while broadening the sources of growth beyond the mineral sector. It makes it imperative that we identify new opportunities for economic growth and find additional sources of Government revenue. To succeed we must foster strategic and highly productive investments in both people and infrastructure, and streamline our policies to enhance private sector participation. We should avoid embarking on new investment initiatives that are not productive, with no future outlook beyond the diamonds era. Instead, this diversification strategy requires us to be particularly rigorous in our evaluation of public sector programmes and projects and prioritise only those that strategically position Botswana to become competitive in the regional and world economy.
- This year’s budget is set within the framework of the tenth National Development Plan (NDP 10) which has been approved by Parliament and forecasts a cumulative deficit of P31.9 billion in constant prices. The deficit which I will propose for 2010/11 and that of the current financial year, will together absorb most of the approved NDP 10 deficit. It follows, therefore, that adjustments must be made to ensure that there is a net surplus for the remaining years of NDP 10. However, to achieve such surpluses immediately would place extreme strain on our public sector. I am therefore, instead, proposing to initiate changes in our NDP 10 budget forecast which will turn the situation around, and restore sustainability in our public finances over the medium term. I shall return to this matter later on when I present the budget proposals for the next financial year.
- I would, however, like to point out that in moving the country’s development agenda forward, care needs to be taken not to overburden our future economic pathway with too much debt, which becomes the first call on future revenues. Therefore, Government must exercise caution in borrowing and in the use of accumulated cash reserves to finance development initiatives. Every project must more than pay for itself, in terms of current and future benefits, to justify the extra cost of borrowing. In addition, Government is in the process of finalising its medium-term debt management strategy. This will ensure that the financing needs of the Government are met at the lowest possible cost consistent with a prudent degree of risk, as well as taking account of the overall macroeconomic framework and market constraints.
- Madam Speaker, given these circumstances, it is imperative that the Government, the private sector and our development partners, work together to continue to transform this economy into one which is globally competitive, more diversified, and resilient to external shocks, such as the recent global crisis. To do so, we need to thoroughly examine the way we have been doing our business. We need to accept that today’s challenges require a new set of solutions and strategies and be prepared to let go of old practices that no longer yield good results. We must find innovative solutions that are consistent with the changed environment. We must also be prepared to learn the skills that we may need to use in the changed environment because we can not be sufficiently creative and productive without relevant skills. It is for this reason that my Ministry, in collaboration with the World Bank, undertook a public expenditure review last year. The review looked at areas such as social service delivery with a focus on, planning, budgeting, financial management, social protection and welfare programmes. The review notes that Botswana’s economy is approaching a period of transition and structural change. It also calls for the transformation of the public sector’s role in our economy, focusing more on the most efficient and effective ways of delivering public services.
- As it is customary, I will brief the House on the international, domestic and sectoral economic reviews for the past year, as these have a bearing on the proposed budget estimates that I will present later.