The major area of focus for the Botswana budget 2011-12 is better fiscal management. A major problem area for this southern African country is its high unemployment rate that stands at 17.5 percent the fact that even graduates are not finding sufficient jobs is an area of concern as well.
The regulations governing employment in the public sector have been recently changed in Botswana. The Bargaining Council that has been set up, of late, is yet to start discussions on reviewing the current pay structure of the public sector employees.
According to Kenneth Matambo, the finance minister, the Botswana economy has been performing well recently. In 2011-12 the national economy grew by 10.7 percent and this has happened due to the growth in mining industry, which expanded by 21.7% at the same time.
Botswana is the biggest producer of diamonds in the world and accounts for almost 20 percent of the entire global production. It recently faced an increased budget deficit when its mining exports decreased owing to the global fiscal condition.
The central bank of Botswana states that several mines had to close down and this resulted in an economic reduction of 6% in 2009. Salaries in the public sector were not paid and the government also reduced its expenditure. The gems are again selling well now, and this has helped the government to increase its tax collection and thus improving the economy.
Botswana Budget 2011-12: Main Aim
The basic objective for the policymakers of the 2011-12 budget is to make sure that the country achieves fiscal parity by 2012-13 fiscal and, as per Matambo, the expenses will also be tailored in that way. He has also said that the main way to achieve this aim is to maintain a consistent rate of economic recovery.
Botswana Budget 2011-12: Tax Reforms
The present system of the company tax, with two tiers, will be annulled in 2011-12. A flat corporate tax of 22 percent will be used to substitute it. Earlier, without Additional Company Tax or ACT relief, this amounted to 25%.
The dividend withholding tax will be charged at 7.5% in 2011-12. Previously this rate was 15 percent along with ACT relief.
The highest limit for individual income taxes will be increased to 36,000 Botswana Pulas per year from BWP 30,000.
The exemption, granted on VAT charged on goods that are imported for personal use, will be increased to 1200 South African Customs Union (SACU) units from 500 SACU units.
Farming tools will be exempted from Value Added Taxes.
Botswana Budget 2012 Estimates:
The 2011-12 Botswana budget is expected to see a deficit of 6.9 billion Botswana Pulas. This is equivalent to 6.3 percent of the GDP.
After the recent performance of gem sales in the present world financial condition, Botswana is hopeful that it will be able to reduce its budgetary shortfall in 2011-12 fiscal.
It is expected that in this fiscal budget deficit will amount to 6.3 percent of the GDP compared to 10.1% as had been estimated at the starting of the fiscal.