Botswana to slash 2025 economic growth projection to 'almost 0%'

Botswana will cut its 2025 economic growth forecast to almost zero due to a prolonged downturn in the global diamond industry, a senior financial ministry official said on Monday, with the budget deficit also seen widening due to reduced diamond revenue.

Botswana is the world's leading producer of diamonds by value and its economy largely depends on diamond exports, which normally contribute around 30% of national revenues and 75% of foreign exchange receipts.

In the 2025 Budget, announced in February, Finance Minister Ndaba Gaolathe had projected 3.3% growth this year based on an expected rebound in the diamond market.

For the 2025/26 financial year, running from April to March, he had forecast a budget debit of 7.56% of gross domestic product, lower than the last financial year's estimated deficit of 9% of GDP.

'Close to zero percent'

But Permanent Secretary in the Ministry of Finance Tshokologo Alex Kganetsano told a parliamentary audit meeting on Monday that those estimates were no longer possible to achieve.

"In view of what has happened since ... February, we are going to revise this growth forecast downwards," Kganetsano said.

"We do have a preliminary figure of close to zero percent, but that figure has to be interrogated internally before we can officially publicise it."

The International Monetary Fund expects Botswana's economy to contract by 0.4% this year.

Slowdown in inflows

Botswana's economy contracted by 3% in 2024 largely due to the diamond market downturn, but the government had expected mineral revenues, including diamonds, to more than double this year which would help it avert another recession.

"The trend doesn't seem to show any improvement, instead it is a deterioration," Kganetsano said.

"As result of a slowdown in inflows we find ourselves sitting on some unpaid invoices to government suppliers," he added.

A significant decline in the country's revenues has resulted in massive liquidity challenges, threatening the financial sustainability of the government's operations, he said.