By definition, a National budget specifies anticipated revenues and proposed expenditures for the forthcoming fiscal year – in this context, it is for the financial year 2021/2022.
There are three major components of a budget; being revenues, expenditures and financing
Major revenue sources for government are mineral revenue; customs and excise revenue from SACU; Non-Mineral Income Tax; VAT; BoB revenue; and various fees and charges.
Categories of expenditure include funding for development projects; and recurrent spending, which covers salaries for civil servants and grants & subventions to State-Owned Enterprises (SOEs) or parastatals
- Whenever there is a shortfall of revenues to finance expenditures, the options available are withdrawal of savings from the Bank of Botswana (GIA) and borrowing (either domestic, externally, or both)
- I will now speak about each of the above with respect to the 2021/2022 Budget
- The structure of our revenues is that it has been highly dependent on external sources
- An example is demonstrated by the budget outturn for 2019/2020 financial year with revenues from minerals and SACU being P28.5 billion, accounting for 52.5% of total revenues and grants
- In the 2020/2021 original budget estimates, we anticipated to raise P35.4 billion or 56.7% from those two external sources
- The revised estimates for 2020/2021 financial now show that we are likely to raise only P23 billion from the two external sources
- Mineral revenue alone fell from the original estimate of P20 billion to P6.5 billion in the revised estimates (2020/2021)
- This trend is unsustainable, and necessitates enhanced efforts towards domestic revenue mobilization, including increases in taxes.
- Given this scenario, with external revenue sources expected to fall significantly, we had no other option but to look at domestic sources so that we fund our own development.
- We cannot continue to rely on external sources of government revenue to finance government operations and continued provision of public services.