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    Eppie’s breakthrough hints at a brighter future for Botswana’s 400m

    Eppie’s breakthrough hints at a brighter future for Botswana’s 400m

    Under Babitseng BFA will be transparent and accountable

    BFA slashes deficit and eyes bright future with financial reform and football revival

    Sports chief raises alarm over doping spike amid Region 5 triumph

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    𝐃𝐞𝐛𝐬𝐰𝐚𝐧𝐚 𝐑𝐞𝐜𝐨𝐠𝐧𝐢𝐬𝐞𝐝 𝐨𝐧 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐬𝐭𝐚𝐠𝐞 𝐰𝐢𝐭𝐡 𝐀𝐔𝐒𝐂 𝐦𝐞𝐝𝐚𝐥 𝐨𝐟 𝐇𝐨𝐧𝐨𝐮𝐫

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    From Promise to Pause: The Support Gap Holding Back Botswana’s Female Athletes

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Budget deficit to widen on falling revenues amid negative GDP growth

mm by Staff Writer
November 13, 2024
in News
Reading Time: 2 mins read
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Budget deficit to widen on falling revenues amid negative GDP growth

House of Botswanian Parlament with watch tower, Gaborone, Botswana,

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An international research firm projects that Botswana’s budget deficit will widen from an estimated 2.7 percent of GDP in the 2023/2024 fiscal year (running from April to March) to 5.4 percent in FY24/25. According to Business Monitor International (BMI), this increase will be driven primarily by subdued mineral receipts, leading to revenue falling short of government projections.

 

BMI highlights that a decline in mining output, particularly diamonds, will heavily impact government revenues. In the first half of 2024, diamond exports dropped by 33.3 percent compared to the same period in 2023, due to weakened global demand. This slump in exports directly affects the government’s revenue from the state-owned Okavango Diamond Company, which is the primary source of Botswana’s mineral income. Mineral revenues have historically constituted about 38.0 percent of total government revenues between FY12/13 and FY23/24, making them crucial for fiscal health.

 

BMI also forecasts that an economic contraction in 2024, with real GDP growth projected at -1.5 percent, will further impact revenue collection. Lower economic activity is expected to reduce income and value-added tax receipts, with total revenue predicted to miss the FY24/25 target by 12.7 percent, amounting to 29.2 percent of GDP, down from an estimated 30.8 percent in FY23/24.

On the expenditure side, BMI expects that while total spending will fall short of the government’s budget projections, it will still remain high. The firm notes that many government expenses, such as wages, are inflexible, preventing quick adjustments in response to revenue declines. Additionally, the government is unlikely to reduce development spending, which is expected to grow by 8.5 percent in FY24/25 in line with the National Development Plan to diversify Botswana’s economy beyond mining.

However, BMI suggests this development target may be overly ambitious due to the revenue shortfall. They forecast total expenditure to reach P94.6 billion in FY24/25, up from an estimated P88.9 billion in FY23/24, undershooting the budget by 5.5 percent but still widening the revenue-expenditure gap.

BMI warns that risks to this outlook lean toward an even larger budget deficit. While they anticipate diamond demand to start recovering in the second half of 2024, any delays could extend the mining sector’s rebound to 2025, exacerbating the shortfall in government mineral revenues and further widening the budget deficit.

Tags: Business Monitor International (BMI)Okavango Diamond Company (ODC)

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