Customs And Excise Overtakes Diamond Revenues
Finance and Development Planning Minister, Baledzi Gaolathe, yesterday put up a brave face and presented an ambitious budget proposal at the National Assembly in which he vowed to press ahead with the country's development projects to boost the economy and employment levels, despite the economic recession which has threatened the nation's income sources.
While admitting that the diamond revenues which account for over 70 percent of national exports will fall by more than half, Gaolathe announced a P37,79 billion budget against estimated revenues and grants of only P24,39 billion resulting in an all time deficit of over P13billion.
The deficit will be financed by tapping into the country foreign reserves which currently stand at P72billion providing about 28 months cover as well as borrowing from both the domestic and international markets.
"While under normal circumstances a deficit of this magnitude would not be prudent, we must at the same time, recognise that in extraordinary circumstances such as these, a fiscal stimulus to boost growth and employment in the economy is appropriate," he said.
However the minister did not elaborate on the details of the stimulus or how it would benefit the troubled mining sector.
Seventy-two percent of the budget, which is five percent higher that the 2008/09 fiscal year, will go towards recurrent expenses while 28percent will go to the development budget.
In the recurrent budget, the Ministry of Education and Skills Development took the largest share at P7.57 billion with Local Government second getting P4.47 billion, State President, P3.38 billion and health, P2.2 billion.
In the P10.56 billion development budget, the minister proposed to allocate the highest chunk to the Ministry of the State President with a budget of P2.09 billion with HIV/AIDS programmes, the BDF, Police facilities and the Directorate of Intelligence ad Security Services taking most of the funds.
Among other the key projects to benefit from this year's capital budget are village infrastructure, district and urban roads, airports, water and sewerage infrastructure.
Contrary to what most analysts had predicted last week, Gaolathe also put up a brave gesture and announced that National Development Plan 10 will go ahead as planned and the 2009/10 budget will mark the beginning of the programme.
"The budget estimates which I am presenting represent not only the first building bock towards NDP10, but they also mark the last lap in the quest for "prosperity for all, by 2016".
Some analysts interviewed by Mmegi last week urged government to postpone or shelve NDP10, saying it would be inappropriate to commit funds to a long-term development programme when the country is in the middle of a crisis whose lifespan was difficult to predict.
However, as largely expected, due to the lower revenues streams, Gaolathe announced that government will not be adjusting salaries for civil servants this year while a number of belt-tightening measures will also be introduced.
"These measures include minimal growth in fleet expansion as well as zero growth for travelling notes and manpower establishments, except for a few critical departments such as new primary schools, new and upgraded health facilities, as well as the new Department of Internship programme.
"Other measures may be invoked during the year as the need arises," he said.
On the revenue side the minister said that as diamond revenues are expected to fall by over 50percent, customs and excise revenue at 28.97percent is expected to be the largest contributor to the national coffers in the fiscal year, followed by minerals at 28.02.