Internationl Monetary Fund has once again emphasized the need by the government to cut down expenditure which is considered to be very high in international standards.
“The government’s spending envelope is above 30 percent of the gross domestic product thus warranting a thorough assessment of pockets of unproductive spending and ways to increase efficiencies, said Lamin Leigh, IMF Mission Chief for Botswana in a statement after their meeting with government officials last week.
The mission also recommended the rebalancing of revenue-raising and expenditure-cutting measures saying this could be achieved by complementing the measures in the budget with policies that widen the domestic tax base and prepare the economy for an eventual decline in diamond revenues.
“Measures in this regard include a judicious rationalization of tax exemptions and improvements in tax administration to broaden the revenue base,’’ reads the statement.
However the mission commended the government on the 2012/13 budget which targets a small fiscal surplus.
The mission also welcomed the emphasis given by the government to broaden access to financial services and improve financial intermediation.
“While Botswana’s financial system has grown and diversified considerably over the last decade, the level of financial intermediation is relatively low compared with other high middle-income countries although it has improved in more recent years.
Thus, greater financial development and inclusion are consistent with current government policies as described in both the Vision 2016 and National Development Plan (NDP) 10.”
The government’s emphasis on poverty eradication, inclusive growth, tackling the high level of unemployment and diversifying the economy was also described as well placed.