Botswana is preparing to drastically reduce its economic growth forecast for 2025 to nearly zero, as the country struggles with the prolonged decline in the global diamond market. The downturn is also expected to widen the national budget deficit, underscoring the country’s economic vulnerability due to its heavy reliance on diamond exports.
Speaking during a parliamentary audit committee session on Monday, Permanent Secretary in the Ministry of Finance, Tshokologo Alex Kganetsano, acknowledged that earlier economic projections can no longer be met. “We are now compelled to review our growth expectations downward,” he said. “Preliminary analysis puts the growth figure at close to zero percent, but we must complete our internal assessments before making it official.”
Botswana, the world’s leading diamond producer by value, depends significantly on diamond exports for national income. The sector typically contributes around 30% of government revenues and generates approximately 75% of the country’s foreign exchange earnings. Any volatility in global demand for diamonds, therefore, has far-reaching implications for the country’s fiscal health and overall economic performance.
In February, Finance Minister Ndaba Gaolathe presented a 2025 national budget that projected a 3.3% economic growth rate, based on assumptions of a recovery in the diamond industry. At the time, the minister also estimated a budget deficit of 7.56% of gross domestic product (GDP) for the 2025/26 financial year—an improvement over the previous year’s 9% deficit.
Those expectations have since unraveled, as global demand for diamonds remains weak. The International Monetary Fund (IMF) now forecasts that Botswana’s economy will shrink by 0.4% this year, painting a far bleaker picture than the government’s initial estimates.
Botswana’s economy contracted by 3% in 2024, primarily due to depressed diamond sales. Despite this setback, the government had expressed confidence that mineral revenues would surge in 2025, helping the economy avoid another year of negative growth. However, those hopes have faded as diamond revenues continue to fall short of projections.
Kganetsano warned that the downturn is not just stalling growth but also triggering broader financial strain. “There is no indication of improvement—on the contrary, the situation continues to deteriorate,” he said. “Due to reduced inflows, we are now facing challenges in settling outstanding payments to government suppliers.”
He added that the decline in revenue is placing the public sector under severe liquidity pressure. As cash flow tightens, concerns are rising about the government’s ability to maintain essential services and uphold its financial obligations.
The evolving situation underscores the risks of economic overdependence on a single commodity. With diamond revenues faltering, Botswana faces mounting pressure to diversify its economy, stabilize public finances, and strengthen its resilience against future external shocks.