- After modest growth of 3.2% in 2023, Botswana’s economy contracted by 3% in 2024 as the diamond sector continued to battle “strong headwinds”
GAZETTE REPORTER
Botswana’s growth has contracted sharply and fiscal pressures are mounting primarily due to faltering diamond exports, the International Monetary Fund (IMF) has warned.
Following modest growth of 3.2 percent in 2023, Botswana’s economy contracted by 3 percent in 2024 as the diamond sector — long the bedrock of national revenue — continued to battle “strong headwinds”.
Speaking at the conclusion of the IMF’s Article IV consultation mission held in Gaborone from 15 to 26 September 2025, Mission Chief Édouard Martin stated: “Mining output declined by 24 percent, while non-mineral activity slowed further, to 2.8 percent.”
Lab-grown diamonds
The downturn was compounded by “competition from lab-grown diamonds and lower demand from China,” Martin said.
The IMF noted that the current account balance deteriorated from a surplus of 1.5 percent of GDP in 2023 to a deficit of 4.2 percent in 2024 while international reserves fell to about five months of import cover.
On the fiscal front, the IMF said Botswana’s deficit widened to 7.1 percent of GDP in the 2024/25 fiscal year, driven by “a decline in mineral revenues and increase in current spending.”
Public debt now exceeds 30 percent of GDP.
Consumer prices
Inflation has remained below the Bank of Botswana’s 3–6 percent objective range but is expected to rise as the recent depreciation of the Pula – down 6.0 percent against the US Dollar and 8.6 percent against the South African Rand – feeds through to consumer prices.
“With activity and inflation subdued, the BoB has kept its policy rate unchanged at 1.9 percent since August 2024,” Martin noted.
Looking ahead, the IMF projects the economy will contract by about 1 percent this year but could “recover gradually to more than 4 percent” if reforms to strengthen fiscal sustainability and economic diversification are implemented.
Domestic revenue mobilisation
Martin urged Botswana to boost domestic revenue mobilisation, manage the public wage bill, improve state-owned enterprise efficiency, and encourage private sector-led growth to restore stability.