Botswana has disclosed that the country will need around $3.40 billion over the next two and a half years to cater for expected budget deficits and resuscitate the economy which was wobbled by COVID-19.
The projected cost for Economic Recovery and Transformation Plan (ERTP) spending is $1.7 billion (20 billion pula) for over a period of two years and five months as stated by Reuters.
Additionally, the anticipated budget deficit over the same period is 20 billion pula, which adds up to a total of 40 billion pula to be funded.
A budget deficit happens when expenses exceed the revenue of the country. Generally, the government uses the term ‘’budget deficit’’ when referring to spending as opposed to enterprises or individuals.
Botswana hopes to fund the ERTP and budget deficit by acquiring domestic loans, liquidizing government savings, and also funds generated from taxes.
Meanwhile, the economy of the country has not been in good shape since the outbreak of coronavirus. The pandemic significantly reduced the sales and export of diamonds with the country’s biggest trading partners China and the USA.
Furthermore, the economy suffered a huge drop in finance, after 48 days of mandatory lockdown, which started in March 2020 affecting other leading sectors like tourism, mining, and commence.
So far, the country has achieved progressive results in the battle against COVID-19 as cases have been reduced to only three.
Industries prioritized for investment include agriculture, health infrastructure, transport, and the tourism sector. However, investment plans and goals were majorly affected by global travel restrictions and a nationwide lockdown.
While delivering a budget speech last April, Finance Minister of Botswana, Thapelo Matsheka stated that the country’s deficit is forecasted to reduce to 2.4% of GDP in 2020/21 from 3.9% in the fiscal year which ends in March 2020.
The country looks forward to a budget surplus in 2021-2022 after four consecutive years of budget deficits. Initially, the goal of the budget surplus was set for 2020-2021 perhaps due to COVID-19, the goal couldn’t be realized.
The landlocked country holds an economic freedom score of 69.6, making it’s economy the 40th freest under the 2020 index.