Gaborone – Botswana’s Vice President and newly appointed Finance Minister, Ndaba Gaolathe, has revealed that the country’s financial situation is worse than initially anticipated, prompting discussions of potential salary cuts for top leaders.
Addressing reporters, according to MegiOnline, Gaolathe painted a dire picture of the economy and the government’s budgetary position.
“The situation is far worse than we had expected,” Gaolathe admitted. “In my discussions with President [Duma] Boko, we agreed that cutting both his salary and mine for at least a year might be a necessary first step to begin stabilising the situation.”
A Bleak Financial Reality
Botswana’s economy, heavily reliant on diamond exports, has been hit hard by a prolonged downturn in the global diamond market. Coupled with high pre-election spending under the previous administration, the country faces a widening budget deficit and mounting public debt.
This year’s deficit was forecast at P8.7 billion (2.9% of GDP), but analysts now predict it will far exceed this figure due to underperforming diamond revenues and excessive government spending.
Gaolathe indicated that President Boko’s upcoming State of the Nation Address will provide more clarity on the financial crisis and outline steps to address it.
Challenges Inherited from Previous Leadership
The deteriorating fiscal situation has been exacerbated by the previous administration’s expansionary policies. Despite assurances earlier this year from former Finance Minister Peggy Serame that the deficit was under control, Gaolathe’s early assessment suggests otherwise.
“Government expenditure must be rationalised to align with our current revenue levels,” said Gaolathe. “The diamond market has shifted, and we cannot continue spending as if nothing has changed.”
Experts Call for Urgent Reforms
Economic experts agree that immediate action is required. The Bank of Botswana’s Deputy Governor, Tshokologo Kganetsano, called for swift fiscal consolidation.
“We need to cut spending and find new revenue streams,” Kganetsano said. “It’s like adjusting your household budget during tough times—you switch from luxury to essentials until things improve.”
Keith Jefferis, managing director of Econsult, added that more aggressive spending cuts are inevitable. “The new administration will have to move quickly to implement significant reductions in expenditure to bring the deficit under control,” he said.
Austerity Measures on the Horizon
Debt has increasingly become a lifeline for the government, which has leaned heavily on local capital markets to fund operations. However, experts warn that debt must be managed prudently.
“Borrowing is not inherently bad, but it must be directed toward productive and viable projects that can generate returns,” said Bank of Botswana Governor Cornelius Dekop. “We also need to improve tax collection efficiency and reduce unnecessary spending.”
Dekop further emphasised the importance of digitising government systems to enhance transparency and efficiency.
A Call for National Unity
Gaolathe reassured the public that the new administration is committed to resolving the crisis. “We understand the gravity of the situation and are determined to implement solutions that will put Botswana back on track,” he said.
As the nation awaits President Boko’s address on Tuesday, the government faces the daunting task of steering Botswana through one of its most challenging financial periods. Tough decisions on spending, revenue generation, and public sector efficiency will be critical in charting a path forward.
