Botswana plans to lower its 2025 economic growth forecast to near zero, citing a sustained slump in the global diamond market, a senior official from the finance ministry said this week.
The country also expects its budget deficit to widen as falling diamond revenues take a toll.
As the world’s top diamond producer by value, Botswana’s economy is heavily reliant on diamond exports, which typically account for about 30% of government income and 75% of its foreign exchange earnings.
In the 2025 Budget announced in February, Finance Minister Ndaba Gaolathe had projected economic growth of 3.3% for the year, anticipating a recovery in the diamond market, Reuters news agency reports.
Whereas for the 2025/26 fiscal year, spanning April to March, he forecast a budget deficit of 7.56% of GDP, which was expected to be an improvement from the previous year’s estimated deficit of 9% of GDP.
However, Tshokologo Alex Kganetsano, the permanent secretary in the Ministry of Finance, told a parliamentary audit meeting on Monday that those projections are no longer achievable.
“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 0%, but that figure has to be interrogated internally before we can officially publicise it.”
The International Monetary Fund forecasts that Botswana’s economy will shrink by 0.4% in 2025.
In 2024, the economy contracted by 3%, primarily due to the slump in the diamond market. However, the government had anticipated that mineral revenues, including diamonds, would more than double this year, helping to avoid another recession.
“The trend doesn't seem to show any improvement, instead it is a deterioration,” Kganetsano added.
“As result of a slowdown in inflows we find ourselves sitting on some unpaid invoices to government suppliers.”
He stated that a sharp drop in the country’s revenues has led to severe liquidity problems, putting the financial sustainability of government operations at risk.