It is crucial that Botswana undertakes revenue and expenditure reforms alongside policies review to reduce income inequality, the International Monetary Fund (IMF) has recommended through a report released last Friday.
The report came on the back of thorough engagements with stakeholders, authorities, economic and financial entities and key policy makers, amongst them Finance Minister, Kenneth Matambo and Bank of Botswana Governor, Moses Pelaelo. The Washington Based Global organization team, led by renowned economic researcher and International Finance analyst, Enrique Gelbard, held discussions on the country’s recent developments and prospects that predominately focused on policies aimed at increasing economic growth and job creation while preserving monetary and financial stability.
The IMF states in the report released on Friday June 8th that tax exemptions amongst other issues have to be relooked into. “On the revenue side, it would be important to remove many tax exemptions, increase property taxation, and consider making the personal income tax more progressive.” This recommendation by IMF presents a contrary view to the current path as the country has in its investment wooing basket tax exemption incentives aimed at attracting foreign capital to set up business in Botswana. However IMF advises that tax is vital in boosting the country’s administrative, fiscal and institutional capacity adding that tax revenue is very essential for any developing country to function.
Further, it recommends that Botswana restrains the growth of recurrent spending, improve the efficiency of social programs, and protect public investment while prioritizing projects with the highest payoffs. There have been concerns that government expenditure at times deviates from key priorities such as job creation, industrialization and economic diversification.
The report also underscores that the financial sector can be further developed to intermediate additional savings and lend to productive sectors by strengthening creditors’ rights, improving information on borrowers’ creditworthiness, increasing the issuance of government bonds to develop a reliable yield curve, and promoting mobile payments.
According to Gelbard’s team, the slow pace of economic diversification is worrisome and that depending on a single commodity to finance most of the country budget was highly risky. Market trends, the team observed, evolve with time posing more global economic uncertainties. “The diamond and government-led development model has been showing limitations with lower average GDP growth and slow job creation in recent years, thus Botswana needs an accelerated approach focused on private sector development to enable growth in selected sectors in turn lowering unemployment and diversifying exports.”
The report continues to state that diversification and job creation efforts require focus on prompt and bold market friendly reforms that can reduce the costs of doing business, improve skills in the labour force, make the public sector more efficient, privatize key enterprises, and enable competition and entry of firms in sectors with latent comparative advantage.
IMF however commended Botswana‘s recent announcements on the intention to liberalize visa and work permits’ policies, reduce bureaucratic requirements, and privatize inefficient enterprises. It suggested that to realize successful implementation of the reform however, will require speed and determination including an accelerated passage of supporting legislation, together with accountability among government entities and enhanced monitoring and evaluation of results.“Delivering on the above policies and reforms will be essential to enable private sector-led growth and employment creation in Botswana.”
On the 2018 economic outlook the IMF noted that Botswana’s medium-term prospects were favourable, assuming a decisive and prompt implementation of key fiscal policy measures and market-friendly reforms that enable private sector development, lowers unemployment, reduces income inequality, and diversifies exports into selected sectors. “Real GDP growth decelerated to 2.4 percent in 2017 owing to declines in copper and nickel production and lower activity in construction and trade, while the fiscal and external accounts were nearly balanced, inflation was about 3 percent, the exchange rate was stable, the financial sector remained sound and well capitalized, and public debt continued to be low at about 19 percent of GDP.”
The organization further noted that Botswana’s economic growth was expected to rebound supported by higher diamond sales, a stable macroeconomic environment, and higher government spending. “While the government balance is expected to deteriorate owing to lower revenues from the Southern Africa Customs Union and higher fiscal outlays, the deficit should be manageable given high levels of savings and foreign exchange reserves. In the medium-term, and in line with their track record of prudent policies, the authorities aim at achieving a fiscal surplus.”
China‚Äôs Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.
The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country‚Äôs fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.
In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.
Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.
China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.
Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.
On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.
According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.
The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.
Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.
According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.
The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.
Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.
Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company‚Äôs market capitalization.
Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana. ¬†The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.