March 28, 2023


2 min read

Govt experiences limited fiscal space for new projects

Govt experiences limited fiscal space for new projects

Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane

Story highlights

    The shortfall is attributed to fact that local projects are not capital in nature
    Dr Matlanyane says government will explore various techniques that can help with prioritisation

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THE government is experiencing limited fiscal space for new projects, thus making it difficult to undertake programmes geared towards full implementation of the extended National Strategic Development Plan II (NSDP II) among others.

This was revealed by the Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane in Parliament this week. 

The former Central Bank Governor said the situation is brought about by among others, projects that go beyond their completion date, those that change scope during implementation and no longer address their intended goals as well as projects whose annual budget allocation is insufficient to implement scheduled activities.

Other challenges include the fact that projects in the country are not capital in nature.

“The current project portfolio is too big with about 145 ongoing projects competing for funding,” Matlanyane said.

To address some of the challenges, she said the government would explore various techniques that could help with prioritisation.

They include but are not limited to, alignment to strategy, job creation, financial analysis, risk assessment, cost and, value among others.

The government will further explore Sector Wide Approach (SWAP) to the four key priority areas as a way to allocate funds to programmes that will stimulate the economy and assist in creating much-needed jobs.

Matlanyane said the government would further engage in budget monitoring and evaluations to ensure financial, operational, and capital plans that were developed and approved for implementation as part of the budget processes were being implemented.

It shall also phase out Project Implementing Units (PIU) that consume most of the development budget on the salaries and operating costs for such PIUs.

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As a result, the Ministry of Finance and Development Planning has proposed a capital budget of M6.3 billion for the financial year 2023/24, of which the government contribution stands at M2.69 billion, donor grants contribution at M1.03 billion and the M2.61 billion in donor loans.

The 2023/24 budget is 7 percent below last year’s budget, however, the government contribution is 27 percent above the 2022/23 budget.

The contribution from grants and loans has gone down by 51 and 10 percent respectively.

“The intention of the government continues to be improving the standard of living of the Basotho through these allocations,” Matlanyane added.

Projects that amount to M931.7 million will be implemented for inclusive and sustainable economic growth and job creation.

Such projects include the Wool and Mohair Promotion Project, Agricultural Productivity Programme for Southern Africa (APPSA) as well as the Tikoe Industrial Infrastructure phase three.











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