The government does not anticipate a balanced budget soon due to concerns over high consumption rates and insufficient revenue streams.
Director of Macroeconomic Policy at the Ministry of Finance, Batane Matekane, highlighted the need to restore fiscal stability before increasing government spending. Speaking during an overview of the 2025/2026 Budget Strategy Paper on Thursday, Matekane revealed that during the first six months of the current financial year, the government had already spent P38.87 billion while collecting only P34.67 billion.
“This means we did not have the P4.4 billion that we spent,” Matekane said.
For the current financial year, ending in March, the government projected total revenues and grants of P77.2 billion, with an estimated expenditure of P95.7 billion. This leaves a deficit of P18.6 billion. However, Matekane noted that in just the first six months, the shortfall had already reached P4.4 billion.
Looking ahead, the government expects to collect slightly above P85.4 billion for the 2025/2026 budget. Revenue sources include an anticipated P23.3 billion from SACU receipts and P17.2 billion from mineral revenues. On the expenditure side, the proposed budget is P96.6 billion, comprising a recurrent budget of P71.8 billion and a development budget of P25.1 billion.
“This creates a challenging environment, as it points to an overall deficit,” Matekane explained. “We still anticipate running short of money to finance what we need to do in the coming financial year.”
Recurrent budget challenges
Matekane expressed concern over the government’s recurrent budget, much of which is allocated to salaries for government employees.
“In the 2022/2023 budget, recurrent expenditure was around P60 billion. Of that, personal emoluments accounted for P31 billion, while grants to local authorities and State-Owned Enterprises (SoEs) took P15 billion,” he said.
He emphasised the need to address these costs, noting that development expenditure, which should drive economic growth, remains limited. “The numbers keep growing, yet our revenue sources are not enough. A balanced budget is not expected anytime soon.”
Persistent deficits and their implications
Botswana has been running budget deficits since the 2017/2018 financial year, with no immediate relief in sight. Matekane stressed the importance of restoring fiscal discipline and exploring financing options to manage these deficits.
“These deficits are a nightmare because they need to be financed. Without fiscal consolidation, we risk leaving the next generation with an unsustainable burden,” he cautioned.
Matekane also flagged recurring challenges in electricity generation at Morupule B and uncertainties in the diamond sector due to delays in clearing inventories as risks to the macroeconomic outlook.
“The International Monetary Fund (IMF) constantly questions how Botswana can assure it is on a fiscally sustainable path with such a large wage bill,” he added. “We also need to rethink subventions to SoEs and discuss our fiscal priorities.”
Policy directions and private sector involvement
To address inefficiencies and create a safer environment for private sector involvement, Matekane highlighted the importance of passing the Public Private Partnership (PPP) Bill. “Expediting the PPP Bill into law will give the private sector a clearer and safer space to operate,” he said.
Batisani Mandlebe, Senior Manager of Investment and Trading at Absa Bank Botswana, echoed Matekane’s sentiments. He noted that in the 2025/2026 budget, the government is expected to focus on curbing unsustainable deficits, improving revenue collection, and identifying inefficiencies.
“The government is also likely to continue major infrastructural projects in water, energy, and transport—key conditions for stimulating domestic economic growth,” Mandlebe added.
Similarly, Emmanuel Kwapong, an economist for Africa at Standard Chartered, suggested that capital spending could face cuts in the upcoming budget. He anticipates a stronger emphasis on domestic revenue mobilisation and alternative sources of income beyond the mining sector.
Delay in NDP 12
Adding to the fiscal uncertainty, the government has announced a delay in the implementation of National Development Plan 12 (NDP 12). Instead, it will extend the Transitional National Development Plan to align with the ruling party’s vision.
The 2025 budget, the first under the new government, will be closely watched as a marker of its policy direction. “We need to think about transforming this economy, building a new Botswana, and getting the country back on its feet,” Matekane concluded.
