Botswana’s economic outlook for 2025 has dimmed considerably, with officials now preparing to revise growth projections to near zero. The development stems from the prolonged slump in the global diamond trade, a sector that underpins the country’s fiscal health and foreign exchange earnings.
Speaking before a parliamentary audit Committee, Finance Ministry Permanent Secretary Tshokologo Alex Kganetsano admitted that earlier optimism — including a projected 3.3% growth rate outlined in February 2025 — is no longer tenable, adding that internal reviews are underway to finalise the revised forecast.
The downturn in the diamond market continues to drag on the economy, reversing hopes of a rebound and leaving the nation grappling with deepening fiscal imbalances. In 2024, Botswana’s economy contracted by 3%, and although officials had anticipated a sharp rise in mineral revenues this year, those expectations have been upended. With diamonds accounting for about 30% of state revenue and 75% of foreign currency receipts, the cascading effect of reduced demand has exacerbated liquidity constraints, resulting in mounting unpaid invoices and threatening the government’s capacity to meet financial obligations.
Despite the Finance Minister’s earlier forecast of a reduced budget deficit of 7.56% of GDP for the 2025/26 fiscal year, current realities suggest a widening fiscal gap. The International Monetary Fund has already predicted a 0.4% contraction for Botswana’s economy in 2025, underscoring the scale of the challenge ahead. As the government faces growing pressure to stabilise its finances, the sustained volatility in the global diamond sector raises questions about the long-term viability of Botswana’s mineral-dependent economic model.