The 2019/20 financial year is expected to commence on a P5.11 billion pula budget deficit, this information emerged at the Annual Budget Pitso hosted by the Ministry of Finance and Economic Development in Gaborone this week.
The forecasted budget deficit follows another one signalled by the treasury for the current financial year ending April 2019. The 2018/19 financial year commenced spending on a negative 4.5 billion pula behind proposed expenditures. The budget Pitso is an annual consultative meeting convened by the Ministry of Finance, to engage all relevant stakeholders across government and private sector on public finance matters as well as chat prospected trends for the subsequent year as far as revenue channels and prioritized government spending is concerned.
When deliberating on the Budget strategic paper finance ministry economic experts explained that the deficit mirrors total projected revenue estimation of P61.28 billion against proposed expenditure stretch of 66.40 billion. Mineral revenue is projected to contribute the largest share of revenue at P21.09 billion accounting for 34.4 per cent, followed by customs and exercise at P14.97 billion a 24.4 per cent stake. Non-mineral income tax is the third largest revenue contributor.
It was noted that to contain the deficit and ensure government continues financing key and vital expenditures the treasury will explore borrowing opportunities from available domestic and external resources base globally. Domestic borrowing would entail issuance of government debt securities such as treasury bills and long term government bonds.
When officially opening the Pitso on Tuesday, Minister of Finance & Economic Development Kenneth Matambo told attendants, amongst others high ranking government officials, captains of industries and private sector heads that the main intention of the Budget Pitso was to create a platform where concerned parties can appreciate the national budgeting process. Matambo explained that the Pitso promotes transparency, efficiency, effectiveness and accountability in the use and allocation of available national resources.
He noted that for the past eight years the finance ministry has prepared and presented strategic budget paper for stakeholder engagement. He explained that the paper contains macro-economic developments in both global and domestic economy, fiscal outlook for domestic economy, estimates and budget priorities for the next financial year.
Matambo noted that this year’s strategic paper as the first since ascendance of President Mokgweetsi Masisi to the helm of government enclave reflects 2019/20 financial year national strategic goals premised on key element of President Masisi ’s road map as outlined in various platforms since becoming President of Botswana in April this year. Highlighting on macroeconomic stance Matambo observed that trade related uncertainties between key global economies in China and Unite States spills over to developing economies like Botswana.
“This uncertainties in the global market result in negative propounded externalities to our domestic economic corridors particularly in the mining sector , due to this uncertainties in the global economy growth in our domestic macro economy remains vulnerable and ambivalent” he said. The finance minister shared that however in this current 2018/19 financial year positive economic growth is expected especially in the non-mining sectors.
“This underscores the integral need for the private sectors in developing our economic means and revenue channels outside the traditional anchor which for years has been mineral revenue,” he said. He noted that the Domestic economy has been doing well owing to contained inflation, adding that Bank of Botswana has continued to maintain the bank rate at within its objective range with the aim of promoting the financial services sector and related sub sectors.
“Low inflation is supportive of our economic growth objective, which envisages more goods and services being produced by the private sector, and as a result increasing employment opportunities,” he said Matambo said in the coming year government will deliberately channel more resource into infrastructure development as a key enabler of business and investment with the cardinal intension to diversify the economy form one commodity dependence.
“Persistent budget deficit are not ideal , in pursuit of fiscal sustainability government is committed to controlling expenditure in the medium term , we have to achieve more with limited resources , we will continue coming up with deliberate ways of raising domestic revenues” he said.
Further deliberating on national expenditures and strategic thrust for the 2019/20 finance ministry officials underscored that government will be centred around the broad national priorities of developing diversified sources of economic growth, human capital development, social development, sustainable use of natural resources, good governance and strengthening of national security as well as monitoring and evaluation
Ministry of Finance said government would streamline policies and regulations to improve on the business climate for private sector development within the country by continuing to invest in infrastructural development, education and training, especially technical and vocational education, to achieve sustained economic growth and employment creation. Furthermore, government would continue to implement social welfare programmes as part of efforts to address poverty among the most vulnerable groups of the society.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.