Botswana budget surprise as Finmin seeks P102bn record spend

Botswana has unveiled an ambitious budget for the upcoming years, signalling a strong focus on stimulus and growth. The budget, which marks the largest increases in development spending in the last five years, is geared towards stimulating economic growth and creating sustainable employment opportunities. The government has outlined eight key focus areas that will drive the economy towards the Vision 2036 goals. These areas include infrastructure development, sustaining livelihoods, agricultural expansion, supporting the private sector through business environment reforms, human capital development, innovation and digital transformation, tourism promotion, and the transition towards a green economy. The total budget expenditure is set to increase by 15%, with a significant rise in the development budget by 41%, reflecting the government's commitment to achieving a GDP growth rate of 6% annually. The revised growth projections for 2024 and 2025 stand at 4.2% and 5.4% respectively, demonstrating confidence in the economy's potential for growth. However, there is a recognition that more efforts are needed to catch up with the growth targets, especially in the aftermath of the pandemic. To finance the budget, the government plans to issue green bonds, inflation-linked bonds, and utilize government savings. There is a positive market appetite for these bonds, particularly the green bonds, as asset managers seek new investment instruments. Tax policy reforms are also on the agenda to modernize and expand the tax base, aligning with the government's focus on human capital development and innovation. The upcoming elections in Botswana and several other countries globally are expected to impact the economy, with historical trends indicating increased government spending during election years. The current budget is viewed as an investment in the country's future, aiming to address economic challenges and align with long-term development goals. The budget also marks the end of the transitional national development plan, ushering in a new era of budget oversight and accountability in alignment with electoral cycles. In terms of expenditure allocation, a notable highlight is the focus on the informal sector, with a new fund established to support its growth. Additionally, funds have been allocated for the promotion of agriculture, specifically horticulture and livestock farming, reflecting the government's commitment to diversifying and strengthening key sectors of the economy. Overall, the budget sets a positive tone for Botswana's economic future, emphasizing sustainable growth, innovation, and inclusive development across various sectors.