BoB report attributes the decrease partly to “sluggish demand for rough diamonds and diamond jewellery” and notes how the contraction has dealt a severe blow to government revenues
GAZETTE REPORTER
Diamond production in Botswana fell sharply in the final quarter of 2024, compounding broader economic challenges and triggering a surge in the national budget deficit.
According to the Bank of Botswana’s (BoB) Monetary Policy Report released in April 2025, production by Debswana Diamond Company plunged by 31 percent to 4.2 million carats in the fourth quarter of 2024, down from 6.1 million carats in the same period a year earlier.
The drop was largely attributed to “subdued global demand for diamonds”, BoB said. “Debswana’s production for 2024 amounted to 17.9 million carats, falling short of the target of 20.7 million carats,” says the report.
Challenging trading conditions
“The production guidance for the larger De Beers Group was 29 to 32 million carats in 2024. However, the production guidance for 2025 has been revised downwards to 20 to 23 million carats from 30 to 33 million carats, reflecting the challenging rough diamond trading conditions.”
Lucara Diamond Corporation, which operates Karowe Mine within the Orapa/Letlhakane Kimberlite district, also experienced a downturn. Production in the fourth quarter of 2024 dropped by 7.3 percent to 91,046 carats, down from 98,177 carats in the same period in 2023.
The report attributes this decrease partly to “sluggish demand for rough diamonds and diamond jewellery.” Despite the decline, Karowe Mine is projecting production of between 360,000 and 400,000 carats in 2025, with estimated sales in the range of 400,000 to 420,000 carats.
Widening budget deficit
The contraction in the diamond sector has dealt a severe blow to government revenues. The BoB report indicates that mineral revenues for the 2024/25 fiscal year were slashed to P8.7 billion, down dramatically from the original projection of P25.2 billion.
This collapse contributed to a widening of the budget deficit to P24.7 billion, or 9 percent of gross domestic product — up from an initial estimate of P9 billion or 3.2 percent of GDP.
“As such, total revenue and grants declined to P68.7 billion in 2024/25 from P74.3 billion in 2023/24,” the report states.
For the 2025/26 fiscal year, government expenditure is expected to increase by P4.2 billion, reaching P97.6 billion a 4.5 percent rise from the previous year.
Mixed outlook
The budget retains a strong focus on economic transformation, with infrastructure development prioritised to “unlock economic potential and facilitate transitioning to a high-income status”.
Total revenue and grants are projected at P75.5 billion, a 9.9 percent increase from 2024/25 levels, amid expectations of a diamond market recovery in 2025.
However, Southern African Customs Union (SACU) receipts — historically Botswana’s largest revenue source — are forecast to decline by 8.8 percent, amounting to P24.4 billion or 32.3 percent of total revenue.
Slight improvement
Other key contributors to the revenue mix include non-mineral income tax (26.1 percent), mineral income (20.9 percent), and value added tax (16 percent).
Despite the expected uptick in revenue, the government anticipates a budget deficit of P22.1 billion in 2025/26, equivalent to 7.6 percent of GDP – a slight improvement from the current fiscal year.