The economy of Botswana is expected to contract by 1.7% this year, largely due to a persistent drop in diamond sales, as stated by Finance Minister Ndaba Gaolathe.
In a cautionary address to legislators on Thursday evening, Gaolathe, who also holds the position of vice president, indicated that the economy is under additional threats that may worsen what could be the most drastic slump since the COVID-19 pandemic in 2020.
“These threats include possible further disruptions in the diamond sector, adverse weather patterns such as droughts, floods, and cyclones, as well as continuing challenges with our primary power generation facility,” he remarked.
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Initially projected to grow by 4.2% this year following a 2.7% growth in 2023, the economy is anticipated to recover next year, targeting a growth range of 4% to 5%, Gaolathe indicated.
“This projection is in line with expected global recovery, particularly in major diamond markets, alongside ongoing positive expansion in the non-mining industries,” he further added.
The economy of this southern African country is heavily dependent on mining, especially diamonds, which account for approximately a third of the government’s budget revenues and a substantial share of foreign currency earnings.
The finance minister also outlined various cost-reduction initiatives in response to previous forecasts suggesting that this year’s budget deficit could climb beyond initial projections, hitting 6.7% of the gross domestic product.
These strategies are intended to achieve a balanced budget “in the shortest timeframe possible” by aligning expenditures with anticipated revenues and renewing the nation’s long-stalled public-private partnership policy, he noted.
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