Download Tax Highlights from 2021-2022 Budget: tax_highlights_of_2021-22_botswana_budget.pdf
Download 2021-2022 Budget Summary covering the budget speech: botswana_budget_summary_2021-2022.pdf
2021-2022 BOTSWANA BUDGET SUMMARY
By Honourable Dr Thapelo Matsheka, Minister of Finance and Economic Development, delivered to the National Assembly on 1st February 2021
Proposed Tax Changes
- Value Added Tax (VAT) will be increased from 12 percent to 14 percent with effect from 1st April 2021.
- Fuel levy will be increased by P1 per litre on 1st April 2021.
- Withholding tax rate on dividends will be increased to 10 percent.
- No Tax on the first P48, 000 per annum with effect from the 2021/2022 tax year.
- Taxpayers with outstanding tax amounts will clear the principal amount owed in exchange for write off of interests and penalties charged during the previous tax periods without fear of prosecution.
- Levy on sweetened beverages related to their sugar content, at a rate of 2 thebe per gram of sugar above a content of 4g of sugar per 100 millilitres.
- Plastic bag levy will become operational.
- Levy on second-hand vehicles imported into Botswana will come.
- Government continues to review the fees and levies charged for its services, to assist with revenue generation for Ministries of Transport and Communications; Tertiary Education, Research, Science and Technology; Infrastructure and Housing Development; Mineral Resources, Green Technology and Energy Security; Investment, Trade and Industry and Employment, Labour Productivity and Skills Development. The aim is to have the revised fees/user charges approved to take effect on the 1st April 2021.
Strong Message from the Minister
- We are at a “fiscal crossroads”. Botswana’s accumulated financial buffers have now been depleted.
- At the end of November 2020, the official foreign exchange reserves amounted to P58.7 billion, a 10.0 percent decrease from P65.2 billion in December 2019. This (is) …….an extremely serious deterioration in our fiscal position. The trend in the overall fiscal position is not sustainable.
- Once-in-a-century shock to Botswana, Africa and the entire world.
- Forcing us to implement much-needed policy reforms that we might otherwise have avoided or postponed.
- Botswana economic activity in the second quarter of 2020 was 24.0 percent lower than in the same period in 2019.
- Preliminary data indicate that for the first nine months of 2020, the balance of payments recorded an overall deficit of P14.8 billion.
Our Basic Economic Problem
- Non-diamond exports have also been growing more slowly than GDP as a whole for some time. Botswana has a competitiveness challenge, which needs to be addressed as a matter of urgency.
- The unemployment rate for the quarter ending December 2020 was 24.5 percent.
- 37 percent of public expenditure on infrastructure goes to waste in Botswana.
What are the gateways to success?
- In 2021, we will also be creating opportunities for the private sector to actually deliver major investment projects.
- Growth rate of 8.8 percent projected for Botswana in 2021. But this will require a totally new approach to project implementation.
- There are deep-seated project execution problems that existed before COVID-19. Bottlenecks in the implementation of the development programme, and the resultant underspending, points to capacity challenges in areas such as project design, contracting processes, project implementation, project monitoring and evaluation.
- Allocation of resources for development projects will now be based on a more rigorous process of project appraisal or evaluation using Development Projects Monitoring System (DPMS).
- Private sector should be ready to play a more proactive role in economic development than before.
2019-2020 Historic Estimated Actuals
- The overall fiscal balance for the 2019/2020 = deficit of P11.10 billion
- Under-performance of total revenues and grants, which came in at P54.30 billion.
- Total expenditure and net lending P65.40 billion.
- Development expenditure underperformed by P3.39 billion.
2020/2021 Revised Budget Estimates
- Collapse of mineral revenue dropping by P 13.46 billion.
- Total revenue and grants at P48.33 billion, P14.06 billion below the budget.
- VAT decreased from P8.55 billion to P7.1 billion
- Total expenditure and net lending = P69.36 billion; P57.20 billion for recurrent expenditure & P12.23 billion is for the Development Budget.
- This means a revised budget deficit of P21.03 billion.
- Total revenues and grants are budgeted at P64.58 billion.
- Mineral revenue is estimated at P23.20 billion or 36.33 percent
- Non-Mineral Income Tax is estimated at P13.78 billion
- Customs and Excise revenue is estimated at P13.52 billion
- VAT is estimated at P10.67 billion.
- Total Expenditure and Net Lending P70.61 billion.
- Recurrent Expenditure P56.05 billion
- Development budget P14.75 billion (When asked about the possibility of increasing development budget, Hon’ble Minister referred to this as “balancing figure” in FNB Budget Interview on 2nd Feb 2021, because income and recurrent expenditure is more or less given.
- Statutory Expenditure 21/2022 Financial Year is P9.20 billion
Overall Balance of Budget and Management of Deficit
- Budget deficit of P6.03 billion 2.87 percent of GDP.
- This is based on the possibility of more rapid pace of restoring fiscal consolidation to a sustainable level in the short to medium term.
- This depends on the strong projected recovery in diamond exports.
- Should this recovery not materialise, and a larger budget deficit appear likely.
- Then it may be necessary to cut expenditure if necessary by withdrawal of warrants.
- The entire budget deficit will need to be financed by borrowing.
- Some of this will be sourced from the domestic capital market, following the increase in the bond issuance limit already approved by this Honourable House.
- Increasing domestic borrowing may put pressure on domestic interest rates, which increases debt servicing costs. It is, therefore, essential that we minimise the possibility of Government borrowing “crowding out” borrowing by the private sector.
- Ministry is exploring external financing on the back of a guarantee from the Multilateral Investment Guarantee Agency (MIGA), an arm of the World Ba
Note: If you need information on Measures Taken by Botswana Government towards achieving Budget Goals or the details of Development Budget Projects, please download the printable friendly version.