By Brian Benza and Sfundo Parakozov
GABORONE (Reuters) -Botswana’s economy is forecast to grow 3.3% this year after a contraction in 2024, due to an expected recovery in the global diamond market, its finance minister said on Monday, echoing calls to diversify the economy away from precious stones.
Botswana is the world’s leading producer of diamonds by value and its economy largely depends on diamond exports. Declining earnings have limited government spending.
“This growth outlook is premised on recovery of the diamond industry, which is expected in the latter part of 2025, and continued positive sentiment in the non-diamond mining sectors,” Finance Minister Ndaba Gaolathe said in a budget speech.
The southern African country’s economy is estimated to have shrunk by 3.1% last year, Gaolathe said, which is a bigger contraction than the 1.7% forecast in December by the government.
Gaolathe echoed President Duma Boko, who came to power in November following a landslide election upset and has vowed to diversify Botswana’s economy.
“Botswana’s reliance on diamond revenues has been both a strength and a vulnerability,” Gaolathe said.
The focus would be on expanding key sectors such as tourism, agriculture, manufacturing and energy, he said.
Last week, Botswana and diamond giant De Beers said they had finalised talks on a rough diamond sales deal and on extending mining licences for their Debswana joint venture there to 2054.
Gaolathe said the budget deficit for the 2025/26 financial year running from April to March was estimated to fall to 7.56% of gross domestic product (GDP), lower than the current financial year’s estimated deficit of 9% of GDP.
(Writing by Tannur Anders and Bhargav Acharya; Editing by Aidan LewisEditing by Gareth Jones)
