In a sweeping address that balanced stark economic realities with ambitious reform, Minister of Finance Ndaba Nkosinathi Gaolathe presented the 2026/2027 Budget Proposals to the National Assembly on Monday. Under the theme “A New Era of Economic Transformation and Fiscal Prudence,” the budget marks a definitive shift from diagnosing Botswana’s fiscal ailments to aggressively treating them. Gaolathe’s speech outlined a dual strategy: halting financial bleeding within the state while simultaneously launching a private-sector-led growth engine to end the country’s historic over-reliance on government spending and diamonds.
Confronting Fiscal Fragility
The Minister did not mince words regarding the nation’s economic health. He revealed that the domestic economy contracted by an estimated 2.8 percent in 2024 and is projected to shrink by a further 0.4 percent in 2025. This downturn, largely driven by a slump in the diamond sector, has exposed the fragility of Botswana’s public finances. While a rebound to 3.1 percent growth is forecast for 2026, Gaolathe warned that without deep structural reforms, the economy would remain sluggish and vulnerable.
Central to his address was the urgent need to stop “financial haemorrhaging.” The Minister touted early successes in tightening expenditure controls, noting that the centralisation of Government Purchase Orders (GPOs) had slashed monthly spending by nearly half—from P1.14 billion to P584 million—between July 2025 and January 2026. Furthermore, for the second consecutive year, the government has approved no supplementary budgets, breaking a long-standing cycle of fiscal indiscipline that had eroded national buffers.
Despite these efforts, the numbers remain daunting. The 2026/2027 budget anticipates a significant deficit of P26.35 billion, equivalent to 8.9 percent of GDP. With total revenues projected at P77.22 billion against expenditures of P103.58 billion, the government faces a financing gap that will require increased borrowing. Consequently, public debt is expected to rise to nearly 45 percent of GDP, breaching the current statutory ceiling of 40 percent. Gaolathe signalled that the government would seek to raise this debt limit to allow for a “gradual and orderly” fiscal adjustment rather than imposing shock-therapy austerity that could choke off growth.
The Transformation Agenda: BETP and NDP 12
The budget serves as the launchpad for the Twelfth National Development Plan (NDP 12) and the new Botswana Economic Transformation Programme (BETP). The BETP is described as a high-impact delivery vehicle designed to fast-track 186 specific projects across key sectors, including agriculture, energy, tourism, and manufacturing. The government hopes this programme will unlock over P500 billion in investment and create more than 500,000 jobs by 2036.
In a move signalling a break from past inefficiencies, Gaolathe announced a major pivot in infrastructure delivery. He sharply criticised the “Development Manager” (DM) model introduced in 2023, citing a review that found it had inflated costs significantly, with hospitals costing 56 percent more and schools 34 percent more than conventional methods. As a result, 132 projects under this model have been suspended at the conceptual stage. The Minister promised that future projects would undergo rigorous cost-benefit analysis to ensure strict value for money.
Reviving Key Sectors
Agriculture featured prominently in the speech, both as a source of crisis and opportunity. The government has mobilised P97 million to contain a Foot and Mouth Disease outbreak in Zone 6b, a critical move to protect access to lucrative European markets. Beyond crisis management, the budget supports the turnaround of the Botswana Meat Commission (BMC), which has already cleared nearly P700 million in arrears. Additionally, the launch of the Botswana Mercantile Exchange (BMX) is planned to modernise commodity trading and improve price discovery for farmers.
Energy security also took centre stage, with the Minister outlining plans to make Botswana a net exporter of power. The budget supports the development of an additional 1.5 gigawatts of renewable energy by early 2027 and confirms the timeline for the 600MW Mmamabula coal-fired plant. In a significant policy shift, the government is also studying the unbundling of the Botswana Power Corporation (BPC) to encourage competition and private investment in the sector.
Social Welfare and Infrastructure Investment
While preaching prudence, the budget protects social safety nets and human capital development. The Ministry of Child Welfare and Basic Education received one of the largest allocations at P11.83 billion, while the Ministry of Health was allocated P7.51 billion. A landmark National Health Insurance (NHI) bill is expected to be tabled soon, aiming to overhaul healthcare financing. To address the chronic shortage of medicines, the Central Medical Stores will undergo a radical transformation to improve efficiency and cut costs.
Responding to public outcry over dilapidated public facilities, Gaolathe allocated a ring-fenced P1.85 billion specifically for maintenance. He emphasised that these funds would strictly go toward rehabilitating schools, clinics, and roads, with no virements (transfers) allowed to other areas. The development budget of P23.38 billion also prioritises water and sanitation projects, including the completion of the North-South Carrier pipeline and new water schemes for growing villages.
Tax Reforms and Revenue Mobilisation
On the revenue front, the Minister announced recalibrated tax measures following public consultation. The proposed top-tier personal income tax will now apply to those earning P400,001 and above, attracting an additional 2.5 percent tax. Corporate income tax will rise by 3 percent, and the list of zero-rated VAT items will be trimmed. These measures are designed to reverse the decline in the tax-to-GDP ratio, which has fallen to 13.4 percent, well below the regional average.
A Call for Integrity
Gaolathe concluded his speech with a fervent appeal for national integrity. He declared a “zero tolerance” stance on corruption, equating the theft of public funds to the loss of lives in unbuilt clinics and unsafe roads. Quoting scripture, he pledged to serve with “wisdom, purity, and sincerity,” calling on all public officers to adopt a new culture of service.
As the 2026/2027 budget moves to the debate stage, it presents a complex challenge: executing a high-stakes balancing act of restoring fiscal stability while simultaneously funding the aggressive transformation needed to secure Botswana’s future. For Minister Gaolathe, the diagnosis is complete; the success of this “New Era” now depends entirely on the delivery.
