Botswana’s economy is projected to rebound this year after two consecutive years of contraction, but Government debt is expected to exceed the statutory ceiling due to another large budget deficit, Finance Minister Ndaba Gaolathe told parliament on Monday.
In his budget speech, Gaolathe forecast economic growth of 3.1% in 2026, following estimated contractions of 0.4% in 2025 and 2.8% in 2024. He attributed previous downturns to a prolonged slump in the global diamond market, exacerbated by economic uncertainty and the rising popularity of lab-grown diamonds, which remain central to Botswana’s economy, accounting for roughly one-third of national revenue and three-quarters of foreign exchange earnings.
The minister projected the 2026/27 budget deficit at 26.35 billion pula ($1.91 billion), or 8.9% of GDP, slightly above the previous year’s predicted 25.48 billion pula. He warned that expenditure commitments consistently exceed available resources, leaving the debt-to-GDP ratio on track to reach
38.77% by March 2026 and 44.66% by March 2027, surpassing the statutory ceiling of 40% of GDP.
Gaolathe said short-term credibility concerns from higher debt are outweighed by the economic risks of strict fiscal consolidation. He stressed the urgency of accelerating economic diversification and bolstering non-mining growth sectors to ensure sustainable development.