Prepared by Patrick Akatu.
The diamond sector accounts for about 35 percent of GDP, 72 percent of exports of goods and services, and 50 percent of government revenue.
The broad goals of the government’s AIDS programs were articulated in a recent strategy document and include the following: strengthening prevention efforts; stepping up the provision of treatment, care and support for AIDS’ patients; mitigating the social and economic impact of the pandemic; and improving the management of the country-wide response.
Noninvestment current expenditure is defined as total current expenditure excluding outlays on health and education, which are regarded as investment in human capital.
The VAT was introduced in July 2002 at a single, nonzero rate of 10 percent. It has a broader coverage of goods and services than the sales tax that it replaced. Petrol, diesel, paraffin, maize meal, sorghum meal and exports are zero-rated. The SACU comprises Botswana, Lesotho, Namibia, South Africa, and Swaziland. Customs and excise duties collected are paid into South Africa’s National Revenue Fund, and the revenue is shared among members according to a revenue-sharing formula that was revised in 2002.
The New SACU Agreement was covered in a recent staff paper, (IMF Country Report No. 04/23). Under the new revenue- sharing formula, members’ receipts have three components: a customs component, based on intra-SACU imports; an excise component, by which 85 percent of excise collections are shared according to members’ shares of SACU GDP; and a development component for distributing the remaining 15 percent of union-wide excise collection.
Transfers to private pension managers in respect of the accumulated benefits under the previous pension scheme since the Government began implementing the new pension system in 2001, reached P 10 billion (27 percent of GDP) at the end of 2003. In addition to the impact of the stock reduction, net earnings have also been reduced by the interest cost of BoB certificates, which had to be issued to drain excess liquidity in the banking system caused by the transfers.
A top rate of 25 percent applies to personal and company income taxes, and the capital gains. Manufacturing companies are subject to a basic 5 percent rate and an additional rate of 10 percent.
National AIDS Coordinating Agency: National Strategic Framework for HIV/AIDS 2003–09. The NSF brings together all HIV/AIDS programs and projected expenditures, including identified donor funding, which is estimated at about 30 percent of projected total expenditure.
These include an old-age pension scheme introduced in 1976, an orphanage support program for all orphans, and a destitute policy introduced in 1980 and revised in 2000. The National Poverty Program approved in 2003, as well as the NSF, reinforces these programs of support for the vulnerable.
Botswana’s public debt has been historically low (under 10 percent of GDP in 2002). The first issue of domestic debt in 2003 in the form of bonds was only for the purpose of stimulating the development of the domestic financial market.