Botswana’s Government presents 2023 Budget to Parliament

This Alert highlights the Budget Speech presented by the Honorable Dr. Peggy Serame, Botswana’s Minister of Finance & Development (the Minister) to Parliament on 6 February 2023.

Economic highlights

In her budget speech, the Minister emphasized that transformation requires time and thus the results thereof cannot be achieved in one budget cycle. Instead, each year’s budget proposal represents, among others, positive steps taken to contribute towards the achievement of the transformation agenda.

She was upbeat about the performance and resilience shown by the Botswana economy that saw Botswana emerging with one of the fastest recoveries from the impact of the COVID-19 pandemic with an impressive Gross Domestic Product (GDP) growth rate of 11.8% recorded in 2021. The economic recovery has continued with strong GDP growth of 6.5% year-on-year over the first three quarters of 2022. For the full year of 2022, it is estimated that economic growth reached 6.7% despite the trailing effects of the Covid pandemic as well as the war in Ukraine.

On the development and growth agenda, the budget focused on the need to direct the bulk of the resources to areas that will significantly change the lives of Batswana, and create new, sustainable economic opportunities, i.e., infrastructure development budget, so as to unlock constraints to economic growth.

Key statistics

• The 2021/22 budget deficit was P127.89 million, or 0.1% of GDP, while the 2022/23 budget deficit is expected to be P4,88 billion, or 2.13% of GDP.

• Economic recovery of 6.7% is set to be accompanied by inflation within the expected range of 3% to 6%.

Fiscal legislation

The Minister acknowledged the need to continue providing targeted support to sustain livelihoods. As a result, the Ministry is considering the following:

• Reviewing the lists of items that are zero rated or exempted for Value Added Tax (VAT) purposes. The lists will be extended to include, among others, sanitary products and private medical services.                                                                   

• Some items that are currently zero rated/exempt from VAT that are no longer justifiable to remain on those lists may be removed.                                                                                                                                                                                         

• Amending the Transfer Duty Act (Amendment) Act, 2019, to address the challenges the legislation has on transfers of tribal land by Land Boards.

A number of other fiscal interventions will also be implemented to reduce revenue leakages as well as improving the processes and capacity of the revenue authority to execute its mandate.

These measures include:

• Introduction of electronic billing/invoicing platforms to improve VAT compliance.                                                                   

• Introduction of a digital marking and tracking solution for excisable goods to ensure that legitimate duties and taxes are paid on imported and manufactured products.                                                                                                                        

• Enhanced capacity in the use of non-intrusive equipment (scanners) to curb cases of non-compliance by importers at ports of entry.                                                                                                                                                                                     

• Implementation of the Debt Recovery Strategy and strengthening of the Tax Audit function and the capacity of the Large Taxpayers Unit.

For the complete budget speech go to Ministry of Finance - Government of Botswana website.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Advisory Services (Pty) Ltd, Gaborone

• Bakani Ndwapi, Country Managing Partner

• Thomas Chitambo

• Cleverent Mhandu

• Langton Madzamba

Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris

• Bruno Messerschmitt

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

• Kwasi Owiredu

Ernst & Young LLP (United States), Pan African Tax Desk, New York

• Brigitte Keirby-Smith

• Dele A. Olagun-Samuel

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.