Botswana Faces Major Economic Downturn as Diamond Sales Decline Further from 2020 Levels

Botswana’s economy is projected to shrink by 1.7% this year, primarily due to a sustained decline in diamond sales, according to Finance Minister Ndaba Gaolathe.

During a warning to lawmakers on Thursday evening, Gaolathe, who also serves as vice president, highlighted that the economy faces additional risks that could exacerbate what might be the most significant downturn since the coronavirus pandemic in 2020.

“These risks involve potential further disturbances in the diamond market, severe weather events such as droughts, floods, and cyclones, as well as ongoing issues with our main power plant,” he stated.

Initially forecast to grow by 4.2% this year from 2.7% in 2023, the economy is expected to rebound in the following year, aiming for a growth rate between 4% and 5%, Gaolathe noted.

“This expectation aligns with projected global recovery, especially in key diamond markets, along with ongoing positive growth in the non-mining sector,” he added.

The economy of this southern African nation relies heavily on mining, particularly diamonds, which contribute around a third of budget revenues and a significant portion of foreign currency income.

The finance minister also revealed several cost-cutting strategies in response to earlier projections that this fiscal year’s budget deficit could exceed initial estimates, reaching 6.7% of gross domestic product.

These measures aim to achieve a balanced budget “in the shortest possible time” by aligning spending with projected revenues and revitalizing the country’s long-delayed public-private partnership policy, he noted.

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