February 6, 2004

Finance minister to announce budget cuts

Finance and development planning minister Baledzi Gaolathe is expected to announce unprecedented budget cuts for ministries when he will present the 2004/2005 budget to Parliament. Economic observers said that revenues which government derives from diamonds tumbled in the last few years because of a stronger Pula against the US Dollar. According to Dereck Hudson of Phaleng Consultancies diamond sales were high while the appreciation of the Pula against the US dollar meant that in Pula terms the government expects less revenue. Hudson said with less revenue government was expected to cut down and to be very careful on the spending if it wanted to come up with a balanced budget. He suggested that if there were any budget cuts, it should start with the Botswana Defence Force.

In recent years government expenditure has been growing at a considerably faster rate than revenue. Minister Gaolathe had told Parliament during the 2003/2004 budget speech that over the five years from the 1998/1999 to the 2002/2003 financial years total revenues and grants grew by 73.6 per cent, while government expenditure grew by 124.7 per cent. He said no wonder there were budget deficits in three of the five years and warned that uncontrolled budget deficits would, among other things, exhausts foreign exchange reserves thereby worsening the country's vulnerability to natural disasters. As Gaolathe warned that the budget deficit should not be allowed to be endemic, it is more likely that, as Hudson observed, would slash funding for the different ministries to avoid another budget deficit. President Festus Mogae said that some planned development projects would have to be shelved to make up for salary adjustments after government adopted the De Velliers report on the civil service pay structure. (Daily News, Gabarone)


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