The African Development Bank (AfDB) has approved a \$304 million loan to Botswana to help address growing fiscal pressures and support key economic reforms amid declining diamond revenues.
The loan, approved by the AfDB Board of Directors on 14 May, will fund the Governance and Economic Resilience Support Programme (GERSP), a one-year budget support initiative for the 2025/26 fiscal year.
Moono Mupotola, the AfDB’s Deputy Director General for Southern Africa, said the loan comes at a pivotal moment as Botswana contends with financial strain. “We will work with the new administration to implement reforms that promote fiscal sustainability, enhance transparency, and foster a more business-friendly environment for economic diversification,” she stated.
Botswana’s economy, heavily reliant on diamond exports, contracted by 1.7 percent in 2024 due to weak global demand. The fiscal deficit, which was balanced in 2022/23, widened to 4.7 percent of GDP in 2023/24 and is projected to increase to 6.7 percent this year.
The GERSP programme aims to improve fiscal sustainability and stimulate inclusive growth. Planned measures include enhancing domestic revenue collection, reducing illicit financial flows, and improving the efficiency of public spending.
The programme will also prioritize support for small and medium-sized enterprises (SMEs), with a focus on those led by women and youth, to promote job creation and reduce inequality.
AfDB’s Director of Governance and Economic Reforms, Abdoulaye Coulibaly, described the loan as a short-term intervention to stabilize the country’s finances while aligning with the new government’s broader development objectives.
“The African Development Bank is committed to Botswana’s long-term development through transformative reforms, strategic financing, and continuous policy engagement,” Coulibaly said.
AfDB has maintained a strong partnership with Botswana, including support for the Economic Recovery Support Programme in 2021–2022.