Botswana plans to swing back to a budget surplus in 2020 after three straight years of deficits, Finance minister Kenneth Matambo said on Thursday.
The diamond-producing southern African country expects a budget deficit this year estimated at 3.5 percent of gross domestic product (GDP), the same as 2018’s estimated shortfall, Matambo had said in his budget speech on Monday.
On Thursday, Matambo told a media briefing that the 3.5 percent deficit for 2019 which amounts to 7 billion pula ($667.80 million) will be financed from borrowing from the local or outside markets as well as drawing down of cash reserves.
“We have had three years of budget deficits and this was a deliberate move to try and boost the economy,” he said.
“Through a combination of expenditure control and expansion of revenue sources, including widening of the tax base we plan to return to modest surpluses in the financial year beginning April 2020.”
Matambo also said China has agreed, in principle, to lend 10 billion pula to Botswana for capital projects, a facility which he said would not expose the country to any debt distress.
“We have not signed yet but they have agreed to lend us the money, which will be useful when it comes. Concerns have been raised about African countries getting loans from China, but I want to clearly say that I have got not issues with getting money from China’s long as the terms are right,” he said.
Botswana has forecast that economic growth would slow to 4.2 percent in 2019 from an estimated 4.5 percent in 2018.
Matambo said the sluggish projections are based on the expected performance of the minerals sector, which he said is heavily reliant on the global economy.
“The projection of lower growth is a reflection of what we expect to happen in the global economy, whose growth is slowing. One of the biggest contributors to our economy is the minerals sector and this is highly dependent on the happens in the global economy,” he said.
Botswana, which produced 24.1 million carats of diamonds in 2018, sees mineral revenue as the highest contributor to the budget at to 35.62 percent of total revenues.
($1 = 10.4822 pulas)