Botswana budgets for growth
February 10, 2006
Gaborone - Presenting a budget that reduces personal taxes, increases development spending and public service wages, and commits to $7-billion worth of growth-accelerating projects, Botswana finance minister Baledzi Gaolathe on Monday called upon Batswana to use what he was giving them to build an innovative and more productive economy.
"The private sector needs to strengthen its ability to be innovative in order to compete in world markets. There have been concerns about our workers' unsatisfactory attitude towards their jobs and inadequate focus on the customer.
"They have to strive for improved productivity to enhance Botswana's competitiveness," he told the National Assembly in his 2006-07 budget speech.
He presented a budget in surplus by 922.5 million pula (R1.05 billion).
Although the unassuming finance minister would be embarrassed to be credited with bringing about this good fortune, it is his prudent but often criticised tough fiscal policies of the past two years that have found the resources to regenerate an economy that whilst fundamentally sound, is suffering short term malaise.
Most of the resources for his new policies have come from his innovative forex manipulation of the dollar earnings from diamond production. In volume (carat weight) it has - and will in the future - change only slightly.
Botswana is the world's largest producer by value of diamonds and produced 31.9 million carats in 2005, 31.1 million in 2004 - production has reached a plateau.
Over 2004 Botswana's export of diamonds totalled $2.8 billion or 13.1 billion pula (R14.9 billion).
In 2005, they were an estimated 14.3 billion pula - in May 2005, Gaolathe devalued the pula by 12 pct and instituted a 'crawling band' exchange regime.
"It has been done," said Gaolathe, "to help Botswana's new export industries whose market is South Africa."
The pula had been appreciating against the dollar and the rand - it now began to track the heavily dollar-influenced South African rand month by month.
The exporters did benefit, but pula diamond revenues more so.
"Mineral revenues over 2005-06 increased by 963 million pula primarily because of diamond revenue increases," Gaolathe said.
"A record surplus in the current account of 6.5 billion pula is forecast for 2005, driven by a balance of substantial increase in exports as compared to the smaller increase in imports. - Sapa
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