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Office of the President (OP)
Inside the Presidency-Issue No 11 of 2011
09/06/11

Still shining but not invulnerable

Welcome once more to your weekly window into the Presidency. Notwithstanding the negative effects of the ongoing strike by a segment of public the service, this past week our country was in the global spotlight for its emerging economic prospects and traditional political stability. 

On Tuesday Standard & Poor's Ratings Services reaffirmed its confidence in the macro-economic policies of Government and the Bank of Botswana by maintaining its “A” credit ratings. In a globally circulated press release the agency noted that:

"Botswana's stable politics, track-record of prudent macroeconomic policies, and high level of transparency are strong by emerging market standards…abundant diamond resources, well-managed and exploited, and a social-democratic-style welfare state, have helped Botswana to develop from one of the world's poorest countries to a middle-income country.”

The S&P statement, however, warned that our current economic recovery could come undone if the Government were to abandon its efforts to control and reduce its deficit spending.

Renewed confidence in Botswana was also globally communicated on Tuesday by the International Monetary Fund (IMF) in a statement issued at the end of a two week mission here to consult on recent economic developments. Among other things IMF concluded that:

“Thanks in large part to good policies supported by a rebound in diamond exports, the Botswana economy is now back onto a strong growth trajectory."

The mission further praised government's current spending priorities noting that: “The mission supports a number of ongoing government initiatives to improve public financial management, including better prioritization of overall government spending, emphasis on maintenance and refurbishment of existing infrastructure projects rather than initiating new projects..."

But, the IMF also expressed continued concern about Government's large share of total GDP as reflected in the public sector wage bill which it characterized as being "unsustainable":

"...the mission’s view is that wage policy should be prudent and any nominal adjustment made in FY2011/12 would need to be financed by either over performance in revenues or expenditure savings generated elsewhere in the budget so that the budget deficit remains unchanged. Going forward, the government would need to reduce the size of the wage bill as a share of GDP as this remains rather high relative to comparator countries and is not sustainable. Reducing the wage bill would also require efforts to make the public service leaner and more efficient."

Faced with similar advice from the IMF and others in the past, H.E. the President and his advisors have remained mindful of the social as well as economic costs of putting people out of work. As the Hon. Minister of Presidential Affairs and Public Administration most recently observed at a briefing on the strike:

“During the economic recession, Government took a deliberate decision to avoid retrenchments and salary reduction in the public service, and even assisted some private sector companies in the mining and textiles sectors to maintain current jobs and incomes. This was made possible by running huge budget deficits, and maintaining high expenditures despite lower revenues.”

The Minister also reminded those in attendance that last year Government incurred additional costs in order to comply with the provisions of the new Public Service Act by paying all public service employees who are on permanent and pensionable terms for a 22-day month instead of the 20-day month, further observing that:

“This resulted in a 10% increase to the Government Wage Bill, in actual Pula this amounts to about P700 million. The public sector wages cost Government P 12 billion annually, which is more than the P 10 billion allocated for development projects during this financial year.” 

Botswana’s enviable international standing was still further highlighted this week by the release of the 2011 Global Peace Index (GPI). As in past, this year’s index once again listed Botswana as among the world’s most stable societies, as well as number one in Africa. Our world ranking was 35 out of the 153 countries, placed us immediately ahead of France and well above such democratic friends as Brazil (74), the USA (82) and South Africa (118).

The obvious question in light of ongoing events is will we be able to maintain this enviable position? That some Government workers are on strike need not, in itself, become a long-term threat. Strikes can and do occur in the life in any democracy, which is why our country has appropriate laws and mechanisms in place for managing such circumstance, which are fully consistent with relevant ILO protocols.

The danger rather lies when the democratic and legal right of workers to go on strike is corrupted by those willing to incite others to break the law through such actions as ignoring court orders and vandalising public property.

In this respect the Index is a useful reminder of where we have been and should remain - a nation whose social and economic progress as well as peace and stability is rooted in our respect for one another and the rule of law.

 

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