Botswana will lower its growth projection due to the protracted decline in the diamond market
Due to a protracted decline in the global diamond business, Botswana will slash its 2025 economic growth prediction to nearly zero, a top financial ministry official announced Monday. The budget deficit is also expected to expand as a result of lower diamond earnings.
The economy of Botswana is heavily reliant on diamond exports, which typically account for about 30% of national income and 75% of foreign exchange earnings. Botswana is the world’s top producer of diamonds by value.
Based on an anticipated recovery in the diamond market, Finance Minister Ndaba Gaolathe projected 3.3% growth this year in the 2025 Budget, which was unveiled in February.
In contrast to the previous fiscal year’s projected deficit of 9% of GDP, he projected a budget negative of 7.56% of GDP for the 2025–2026 fiscal year, which runs from April to March.
However, Tshokologo Alex Kganetsano, permanent secretary in the ministry of finance, stated at a parliamentary audit meeting on Monday that those projections were no longer feasible.
“In view of what has happened since … February, we are going to revise this growth forecast downwards,” Kganetsano stated.
“We do have a preliminary figure of close to zero percent, but that figure has to be interrogated internally before we can officially publicise it.”
The International Monetary Fund predicts a 0.4% contraction in Botswana’s economy this year.
The decline in the diamond market contributed significantly to Botswana’s 3% GDP decline in 2024; however, the government had anticipated that resource earnings, especially diamonds, would more than quadruple this year, helping to prevent another recession.
“The trend doesn’t seem to show any improvement, instead it is a deterioration,” stated Kganetsano.
“As result of a slowdown in inflows we find ourselves sitting on some unpaid invoices to government suppliers,” he said.
The financial viability of the government’s operations is in jeopardy due to severe liquidity issues brought on by a sharp drop in the nation’s revenues, he said.
