Financial Prudence Influences Indebtedness

| April 13, 2015

Government has been proactive in instituting policies that are geared towards enabling individuals to manage their debt levels.

Briefing Parliament during the minister’s question time the Assistant Minister for Presidential Affairs and Public Administration, Mr Phillip Makgalemele, said indebtedness was a cross cutting issue that extended beyond the civil service but also cutting across different income groups, social groupings as well as professions.

“Financial prudence at individual level tends to influence indebtedness. Uninformed financial decisions may lead one into financial stress which could have been avoided.

Any discussion of indebtedness needs to draw a distinction between high levels of borrowing and inability to meet commitments.

Commitments in this regard may include loan repayment, household bills and other forms of borrowing,” he said.Mr Makgalemele said an indicator of indebtedness arising from the failure to honour commitments comes in the form of arrears on utility bills, rent, and loan repayment amongst others.

However he said government was working round the clock to curb high rising debt levels. This he said included amongst others the setting of a minimum “Take Home Pay” as per General Order 117. “Strict adherence to this provision will assist in managing debts. This measure only applies to deductions through the office of the Accountant General.

These could be deductions for rent, loan repayments, pension contribution, medical aid contribution amongst others,” he added. Mr Makgalemele said the restriction was meant to enable an individual to manage the burden associated with debt repayment. The current minimum “take home pay” rates are A3 to B5 scale P600 per month, C4 and above P1300 per month.

Mr Makgalemele told Parliament that civil servants could acquire subsidised loans through the Government Employee Motor Scheme to develop or buy property. He said the repayment period for the mortgage taken through this scheme was increased from 10 years to 20 years in 2014.

Mr Makgalemele said government promoted the culture of saving as it has supported the establishment of the Botswana Public Officers saving and Credit Cooperative Society.

He explained that Public officers from grade D4 downwards had access to the salary aance scheme which is interest free.

“Over and above the initiatives mentioned above government offers financial literacy education in collaboration with different stakeholders. He said training was arranged on periodic basis to empower employees and enable them to develop strategies for managing their finances.

He was responding to a question from GabaneMmankgodi MP Major General Pius Mokgware who had asked the minister to apprise the House on the debilitating civil servants indebtedness.

Source : Parliament

Source : Botswana Daily News

Category: Business & Finance

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