On the 7th of February 2022, the Honorable Minister of Finance and Economic Development, Ms. Peggy O. Serame presented the Budget speech to the National Assembly.
Though the Covid-19 cloud still looms over the global economy, the government is determined to build resilience. The government has positioned itself to turn the economy around from the high levels of inflation of 8.7% in December 2021 to a stable range of 3% to 6%. This presents
opportunities for investors and small businesses owners.
The budget speech is an estimate of government expenditures
and revenues and the financial plans for the ensuing fiscal year presented
annually to the National Assembly by the Minister of Finance and Economic
The 2022/2023 Budget proposal is a response to the recovery and growth agenda. The government intends to stimulate the economy and to repel the effects of COVID-19.
The speech not only marks the end of NDP 11 but focuses on continuing to build resilience through economic policies and strategies. These strategies include the Mid-Term Review (MTR) of NDP 11 and the Economic Recovery and Transformation Plan (ERTP).
These are complemented by the Reset Agenda priorities as pronounced by His Excellency, the President of Botswana, Dr. Mokgweetsi E.K. Masisi.
To know how the current fiscal policy is impacting the economy in the coming year, we have highlighted some economic indicators:
- The domestic economic growth rate of 9.7 % is estimated for 2021 and 4.3% projected for 2022.
- Inflation reached 8.7% in December 2021. The objective range expected is between 3% and 6% during 2022.
- Bank rate maintained at 3.75 % during 2021.
- Balance of payments deficit of P20.1 billion (or 11.6 % of GDP) recorded in 2020, compared to a P12.0 billion deficit (6.7 % of GDP) in 2019.
- Foreign exchange reserves amounted to P60 billion in October 2021, which was equal to 11.3 months of import cover for goods and services. Compared to 58.7 billion in November 2020 and equal to 10.9 months of import cover.
- As of November 2020, the Government Investment Account part of the reserves was only P5.6 billion, compared to P17.8 billion at the end of 2019.
- The actual budget out-turn for 2020/2021 was a deficit of P16.41 billion (9.4 % of GDP).
- The 2021/2022 revised budget estimate is a deficit of P10.16 billion (5.09 % of GDP).
- The projected 2022/2023 budget deficit is estimated at P6.98 billion, representing 3.2% of GDP.
For the coming financial year, the minister emphasized the aim to broaden the domestic revenue base by extending the tax net and improving the revenue collection efficiency. However, there are no changes to the corporate tax rate of 22 %, the value-added tax
rate of 14%, and others.
Special Economic Zone (SEZ) Order
This order means that income accruing to an investor or developer from a SEZ-licensed business is to be taxed at a special rate. That is a tax of 5% for the first 10 years of operation in a special economic zone and thereafter 10%.
Key initiatives in the Botswana Budget speech:
- Focus on the maintenance of public infrastructure, and reserving the bulk of maintenance
- projects for citizen-owned companies.
- Providing a focused fiscal stimulus throughout the entire country.
- Budget allocation for social welfare programs will be maintained or increased to protect the most vulnerable members of our population.
- Funding for the development of sporting talent.
- The refocusing of resources to enable a digital transition