Botswana’s proposed P378 billion development spending plan under the draft National Development Plan 12 (NDP12) is ‘a fantasy’ that cannot be implemented or financed. This is according to the latest Fourth Quarter Economic Review by economic consultancy Econsult.
In a hard-hitting assessment of the country’s fiscal outlook, Econsult says the development budget has become one of the most serious weaknesses in Botswana’s public finances citing years of inefficiency, poor project design and weak implementation. ‘The development budget is a particular problem, in part because past development spending has been incredibly inefficient and wasteful,’ Econsult says.
According to the firm, ‘Projects have been badly designed and implemented, but also there have been too many low-return, low-impact projects adopted that cannot possibly generate economic gains.’ The firm argues that instead of stimulating growth, many development projects have ‘acted as a drag on growth rather than boosting growth,’ largely because there has been no effective screening or appraisal system to prioritise high-impact projects within realistic budget limits.
This problem, Econsult says, is starkly illustrated by the draft NDP12 Public Investment Plan (PIP), which proposes spending P378 billion over five years from 2025/26 to 2029/30.
‘The proposed PIP of P378 billion over the five years is a fantasy,’ the review states.
For the 2026/27 financial year alone, NDP12 proposes a development budget of P54.24 billion, a figure Econsult describes as ‘completely unrealistic’.
‘This level of proposed spending could not possibly be implemented or financed,’ the firm says, adding that it hopes the figure ‘does not appear in the final 2026/27 budget when it is presented on February 9th.’
Econsult estimates that, under current conditions, a sustainable development budget for 2026/27 should not exceed P17 billion unless government undertakes drastic cuts to recurrent expenditure, including workforce reductions.
The review also pushes back against political calls for a higher share of the national budget to be allocated to development spending.
‘Claims by many politicians and commentators that the overall budget should devote a higher proportion of spending to development projects is ill-informed and does not stand up to logical scrutiny,’ Econsult says.
The firm notes that every development project creates permanent recurrent costs such as maintenance, staffing and operational expenses, meaning that over time, recurrent spending inevitably rises while the relative share of development spending must fall.
‘The challenge is to refocus the development budget on high-return projects by proper project appraisal and prioritisation,’ Econsult argues. ‘But this essentially means that for budget sustainability and boosting economic growth, the development spending budget must become both smaller and much more effective.’
On public debt, Econsult warns that Botswana’s problem is not the current level of debt but its rapid upward trajectory.
‘Botswana’s public debt is currently estimated at 32% of GDP,’ the firm notes, below the statutory limit of 40%. ‘However, it is not the level of debt that is the issue for Botswana but its trajectory; a sustainable debt can easily become an unsustainable debt if new borrowing is excessive.’
Public debt has risen sharply from 22.7% of GDP in March 2024, largely because government savings have been exhausted after years of financing deficits through drawdowns rather than borrowing.
Econsult cautions that even a single large deficit – around 9% of GDP – could push Botswana beyond its legal debt ceiling.
Raising the debt limit would not solve the underlying problem, the firm warns. ‘If the budget has an unsustainable deficit that is not being addressed, raising the debt limit just means that this behaviour can continue for longer.’
The review also flags growing government payment arrears as ‘hidden debt’ citing a mid-January statement by the Minister of Transport that government owes P15 billion to roads contractors.
‘If correct, this would indicate an even higher level of arrears across government as a whole,’ Econsult says. It called for arrears to be properly quantified and published alongside official public debt figures.