Africa-Press – Botswana. Botswana’s economy is expected to return to growth in 2026 after two consecutive years of contraction, although rising fiscal deficits are set to push public debt beyond the government’s statutory limit, according to Ndaba Gaolathe, the country’s finance minister.
Presenting the national budget on Monday, Gaolathe projected economic growth of 3.1 percent this year, following estimated contractions of 0.4 percent in 2025 and 2.8 percent in 2024.
The Southern African nation—often regarded as one of Africa’s most stable economies—has been hit by a prolonged downturn in the global diamond market. Softer demand, global economic uncertainty, and the rising acceptance of lab-grown diamonds have all weighed on export earnings and government revenues.
Diamonds remain the backbone of the economy, generating roughly one-third of government revenue and about three-quarters of foreign-exchange earnings.
Despite the anticipated recovery, public finances remain under pressure. The budget deficit for the fiscal year starting in April is projected at 26.35 billion pula ($1.91 billion), equivalent to 8.9 percent of GDP, compared with a projected 25.48 billion pula ($1.9 billion) deficit in the current fiscal year.Gaolathe said the widening shortfall reflects a persistent mismatch between spending commitments and realistically available resources, highlighting deeper structural weaknesses in fiscal management.
As a result, Botswana’s debt burden is expected to rise. The debt-to-GDP ratio is forecast to increase to 38.7 percent by March 2026 and further to 44.6 percent by March 2027, breaching the current statutory ceiling of 40 percent.
The minister acknowledged that exceeding the debt limit could trigger short-term investor and market concerns. However, he argued that the economic damage from aggressive spending cuts required to remain within the ceiling would be more severe.He stressed the urgency of accelerating economic diversification and strengthening non-mining growth drivers, noting that reducing dependence on diamonds is essential to restoring long-term fiscal sustainability and economic resilience.
