Botswana’s fragile economic recovery cannot yet support a significant expansion of social spending, Vice-President and Finance Minister Ndaba Gaolathe has told Parliament.
Responding to a question from Bobirwa MP Taolo Lucas, Mr Gaolathe was asked whether the economy could sustain higher allowances for beneficiaries of Ipelegeng/Ikaegeng, tertiary students and Village Development Committees (VDCs) in the near term.
His answer was largely fiscal. Raising all the targeted allowances would cost the government about P4.1bn a year, pushing the projected budget deficit from P26.35bn to roughly P30.4bn. The fiscal deficit would widen from 8.9% to about 10.3% of GDP.
Financing the increase would require additional borrowing. Public debt, currently estimated at 44.66% of GDP, would rise to 46.04%, while debt-servicing costs would climb further.
“The government would need to borrow an additional P4.1bn annually,” Mr Gaolathe said.
The minister’s caution comes despite signs of economic improvement. Botswana’s economy expanded by 3.5% in the first quarter of 2026, reversing a 0.3% contraction recorded during the same period last year.
The stance highlights the tension between campaign promises and fiscal realities. Before taking office, the ruling party pledged to review social grants, raise the old-age pension to P1,800, increase tertiary student and VDC allowances to P2,500, and lower the pension eligibility age from 65 to 60.
Yet Mr Gaolathe argued that revenue growth has not kept pace with the demands that permanent increases in social spending would create.
The government’s priority, he said, is to turn a tentative recovery into sustained and inclusive growth.
To do so, it is focusing on expanding non-mining sectors, attracting private investment, strengthening domestic revenue collection and creating jobs. Central to that effort is the Botswana Economic Transformation Programme (BETP), which forms part of National Development Plan 12. The programme aims to diversify the economy, broaden the tax base and create the fiscal space needed for future welfare improvements.
The stance highlights the tension between campaign promises and fiscal realities. Before taking office, the ruling party pledged to review social grants, raise the old-age pension to P1,800, increase tertiary student and VDC allowances to P2,500, and lower the pension eligibility age from 65 to 60.
For now, however, the government is proceeding more cautiously. Mr Gaolathe said any further increases would depend on available fiscal space and the need to balance competing priorities.
He pointed to measures already introduced in the 2026/27 budget, including an increase in the monthly tertiary student allowance from P1,900 to P2,200 and a rise in the old-age pension to P1,400.
In the meantime, the government intends to rebuild fiscal buffers, keep debt at manageable levels and support economic growth, while reviewing social-support programmes as public finances improve.
