Botswana is preparing to sharply downgrade its 2025 economic growth projections, potentially to near zero percent, as the country grapples with sustained global weakness in the diamond sector. This development was revealed by a senior Ministry of Finance official during a parliamentary audit committee session on Monday, signalling a dramatic shift from earlier expectations of economic recovery.
As the world’s leading producer of diamonds by value, Botswana’s economic performance is intrinsically linked to the fortunes of the global diamond market. Historically, diamond exports contribute approximately 30% of government revenue and account for around 75% of foreign exchange earnings. However, the prolonged downturn in global demand has significantly undercut these revenue streams, raising concerns about the country’s fiscal sustainability.
In February, the Minister of Finance, Ndaba Gaolathe, had projected economic growth of 3.3% for 2025, premised on a predicted recovery in diamond demand. The accompanying budget estimated a fiscal deficit of 7.56% of GDP for the 2025/26 financial year—an improvement on the previous year’s estimated 9% shortfall. However, speaking to Parliament on Monday, Permanent Secretary Tshokologo Alex Kganetsano acknowledged that these targets are now “no longer feasible” in light of prevailing market realities.
“In view of what has happened since February, we are going to revise this growth forecast downwards,” Kganetsano informed lawmakers, adding that preliminary internal estimates now point to a figure “close to zero percent”. While this projection remains provisional, it reflects the increasingly dire state of Botswana’s economic outlook, which continues to deteriorate with the absence of a turnaround in global diamond trade.
Compounding the challenge, the International Monetary Fund (IMF) has forecast a 0.4% contraction in Botswana’s economy for 2025. This follows a 3% contraction in 2024, also driven by depressed diamond revenues. The government had earlier expected mineral revenues to more than double in 2025, providing a buffer against another recession. However, recent trends indicate that those expectations were overly optimistic.
“The trend doesn’t seem to show any improvement, instead it is a deterioration,” Kganetsano noted, further revealing that the fiscal shortfall has led to unpaid invoices owed to government suppliers. This liquidity crunch poses a serious threat to the financial sustainability of public operations and has triggered broader concerns about government solvency in the short to medium term.
As Botswana prepares for a revised economic strategy, questions linger regarding diversification efforts and resilience planning in the face of continued global commodity volatility. The diamond industry, though foundational to the nation’s wealth, now appears to be a growing source of vulnerability.
