Home News & Insights The Botswana National Budget Speech 2026/2027 Analysis & Summary

The Botswana National Budget Speech 2026/2027 Analysis & Summary

February 17, 2026

BOTSWANA BUDGET SPEECH 2026

Presented to the National Assembly on Monday, 9 February 2026 by the Minister of Finance, the Honorable Ndaba Gaolatlhe.

BUDGET HIGHLIGHTS: FISCAL AND TAX POLICY

The 2026/2027 Budget is delivered under the theme “A New Era of Economic Transformation and Fiscal Prudence”, signalling a shift from the diagnosis of fiscal weaknesses towards the implementation of institutional and economic reforms.

Government’s fiscal strategy places fiscal consolidation, rebuilding of buffers, improved tax compliance and more efficient public spending at the centre of policy.

The Budget also emphasises the need for a well-designed and modern tax policy framework to support competitiveness and economic sustainability, noting that Botswana’s tax-to-GDP ratio remains structurally low by regional standards.

The low levels of domestic revenue mobilisation are cited as justification for a comprehensive overhaul of Botswana’s core tax systems in order to:

  • address under-taxed economic activities,
  • improve revenue collection efficiency,
  • strengthen compliance, and
  • broaden the tax base.

Legislative reform of the tax framework

  • Government will table a coordinated set of tax and customs legislation during the current Parliamentary sitting, namely:
    • the Value Added Tax Bill (2025),
    • the Income Tax Bill (2025),
    • the Customs Amendment Bill (2025), and
    • the Tax Administration Bill (2025).
  • These Bills form part of a comprehensive and integrated reform programme aimed at modernising the tax framework, harmonising procedural and administrative rules and ensuring alignment across all tax statutes under a unified Tax Administration Act.

VAT modernisation, remote services and electronic invoicing

  • The Value Added Tax (Amendment) Act, 2025 is highlighted as a major milestone in the current reform programme.
  • The Act introduces VAT on remote services and mandates the use of electronic invoicing.
  • The electronic invoicing framework is intended to support:
    • real-time transaction monitoring,
    • improved compliance,
    • reduced revenue leakages, and
    • enhanced revenue assurance as part of the broader digitalisation of tax administration.
  • The national rollout of electronic invoicing is expected to commence in April 2026.
  • Implementation of VAT on remote services is already underway, supported by system upgrades and stakeholder engagement to enable the registration and compliance of remote service providers.

Personal income tax and corporate income tax proposals

  • Government confirmed that it had previously proposed a 1.5% increase in both corporate income tax and the top personal income tax bracket in the 2025 Budget, but implementation was paused following stakeholder concerns.
  • Following further consultations and review, Government now proposes that:
    • the revised top personal income tax threshold will be P400,001 and above per annum, and
    • this bracket will attract an additional 2.5% tax.
  • In addition, Government has proposed:
    • a 3% increase in the corporate income tax rate; and
    • a reduction in the zero-rated VAT list in order to raise the effective VAT base.
  • Detailed technical provisions of the proposed changes will be set out during the Parliamentary debates on the respective Bills.

Structured consultation and stakeholder engagement on tax reform

  • Government will convene a national Tax Pitso, bringing together business, labour, civil society, technical experts and the general public.
  • The Tax Pitso is intended to:
    • gather practical and operational insights from taxpayers and practitioners; and
    • inform the design of tax laws and supporting administrative infrastructure that are efficient, growth-friendly and minimise economic distortions.
  • The consultation process is positioned as an integral part of the legislative reform programme, rather than a post-enactment engagement exercise.

Key takeaways

  • The 2026 Budget confirms a shift towards a digitally enabled, administratively harmonised and compliance-driven tax system, anchored on:
    • electronic invoicing,
    • VAT on remote and digital services,
    • a unified tax administration framework, and
    • a redesigned Income Tax and VAT legislative architecture.
  • The proposed personal and corporate tax rate adjustments and the narrowing of the VAT zero-rating regime indicate that base-broadening and revenue protection will remain central policy tools under the current fiscal consolidation agenda.

MACROECONOMIC PERFORMANCE AND OUTLOOK

For the 2026/2027 financial year, total revenue and grants are projected at P77.22 billion, with SACU receipts remaining the single largest source of revenue at P26.79 billion. Non-mineral income tax is expected to be the second-largest contributor at P19.76 billion, followed by Value Added Tax collections of P15.10 billion. +1

The projected revenue mix highlights Government’s continued reliance on a limited number of major revenue streams and underscores the importance of strengthening domestic tax collections in support of fiscal sustainability. In this context, the Budget signals an increased focus on tax administration, enforcement and compliance. The Minister emphasised this position by noting that “in Botswana, the need for comprehensive tax reform has never been more urgent.” +2

Global outlook

  • Global growth is projected at 3.3% in both 2025 and 2026, with advanced economies expected to grow by 1.8% in 2026.
  • Growth in sub-Saharan Africa is projected to rise to 4.6% in 2026, while SADC growth is projected at 3.0%.

Domestic economic developments

  • Botswana’s economy is estimated to have contracted by 2.8% in 2024, with a further contraction of 0.4% in 2025, driven primarily by the downturn in diamond-related activities.
  • The economy is projected to rebound to 3.1% in 2026, subject to successful implementation of diversification and reform initiatives.
  • Total factor productivity in the non-mining sector remains weak, reflecting inefficiencies in capital and labour utilisation and reinforcing the need for private-sector-led growth.

Inflation and financial sector

  • Inflation stood at 3.9% in December 2025 and is expected to temporarily breach the upper limit of the Bank of Botswana’s objective range during 2026 before moderating.
  • The Monetary Policy Rate was maintained at 3.5% in December 2025.
  • The domestic financial system remains resilient, although macro-financial risks persist, including subdued economic activity and liquidity distribution challenges.

External sector

  • The merchandise trade account recorded a cumulative deficit of P15.32 billion between January and November 2025.
  • Official foreign exchange reserves declined to P47.4 billion (five months of import cover) in December 2025.
  • Exchange-rate policy adjustments introduced in July 2025 and January 2026 are intended to support export competitiveness, deepen the interbank foreign exchange market and preserve reserves.

MEDIUM-TERM FISCAL POSITION AND RISKS

  • Government’s Net Financial Asset position has deteriorated from approximately 40% of GDP in 2008 to negative 30.1% of GDP in 2024, reflecting sustained fiscal deficits and erosion of buffers.
  • The Government Investment Account stood at P2.91 billion as at November 2025.
  • The medium-term fiscal outlook has been revised downward, with consolidation measures focused on:
    • expenditure prioritisation,
    • improved efficiency of public spending,
    • stronger revenue mobilisation, and
    • reforms of state-owned enterprises.
  • Key risks include:
    • prolonged weakness in the diamond market,
    • delays in economic diversification,
    • fiscal pressures arising from SOEs and PPP projects, and
    • climate-related and cyber-security risks.

PUBLIC FINANCE MANAGEMENT AND GOVERNANCE REFORMS

  • No supplementary budget requests were approved in the 2024/25 and 2025/26 financial years, marking a departure from historical practice and strengthening expenditure discipline.
  • Centralisation of Government Purchase Orders and tighter commitment controls materially reduced monthly spending levels and curtailed unfunded obligations.
  • A National e-Procurement System is being implemented, with full operationalization expected before the end of the 2026/2027 financial year, to improve transparency, governance and value for money in public procurement.
  • The following legislation is being reviewed and will be tabled during the 2026/2027 financial year:
    • Public Procurement Act, 2021
    • Public Finance Management Act, 2011
    • Financial Reporting Act, 2020
  • A National Coordination Office on Anti-Money Laundering, Combating the Financing of Terrorism and Proliferation Financing has been established in preparation for Botswana’s mutual evaluation scheduled for January 2027.

ADDITIONAL INFORMATION OF VALUE TO BUSINESS AND PROFESSIONAL READERS

  • Government has allocated P1.85 billion in 2026/2027 for rehabilitation and maintenance of existing public assets, with a prohibition on virement from maintenance votes.
  • A comprehensive programme to modernise land administration and land information systems will commence, aimed at improving issuance of secure land titles and enabling land to be used more effectively as collateral.
  • Government will launch the Botswana Mercantile Exchange (BMX) to introduce organised and market-driven pricing for selected commodities and support diversification away from diamonds.
  • A National Fund of Funds for MSME financing is under development and is expected to become operational in the 2027/2028 financial year.
  • Preparatory work is underway for the establishment of a Botswana Sovereign Wealth Fund, aligned to the Santiago Principles, to act as a stabilisation buffer and long-term investment vehicle.
  • Significant reforms are underway in the health sector, including:
    • transformation of the Central Medical Stores to reduce medical supply costs by an estimated 30–40% over five years; and
    • the phased introduction of National Health Insurance, with enabling legislation scheduled for tabling during the current parliamentary sitting.

DISCLAIMER

In preparing this document, Andersen has relied upon and assumed, without independent verification, the accuracy and completeness of any information provided to, and/or gathered by Andersen whether from public sources or otherwise, and accordingly Andersen express no opinion or make any representation concerning the accuracy and completeness of any such information contained in this document.

The information contained in this document reflects prevailing conditions and Andersen’s view as of 9 February 2026. Andersen has not undertaken to, nor shall Andersen be under any obligation in any circumstances to update this document or revise the information contained herein for events or circumstances arising after 9 February 2026 and this document or any information contained herein shall not amount to any form of guarantee that Andersen have determined or predicted future events of circumstances.

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by Nomsa Manele

Section RIC – Tax