Africa-Press. Botswana’s finance minister, Ndaba Gaolathe, said the Botswana economy is expected to grow this year after two consecutive years of contraction, although public debt is projected to exceed the legal ceiling due to another large budget deficit.
In his budget speech, Gaolathe said economic growth is forecast at 3.1% this year, compared with contractions of 0.4% last year and 2.8% in 2024.
The southern African country’s economy, long seen as an African success story, has been hit hard by a prolonged downturn in the global diamond market, driven by economic uncertainty and the rising popularity of lab-grown diamonds. Diamonds typically account for about one-third of Botswana’s government revenue and nearly three-quarters of its foreign exchange earnings.
Gaolathe told lawmakers that the projected budget deficit for the fiscal year starting in April will reach 26.35 billion pula ($1.91 billion), equivalent to 8.9% of gross domestic product, compared with an estimated deficit of 25.48 billion pula in the current fiscal year.
“This reflects a structural imbalance in the fiscal framework, where spending commitments consistently exceed available and realistically achievable resources,” he said. Public debt is expected to rise to 38.77% of GDP by March 2026 and to 44.66% by March 2027, exceeding the current legal debt ceiling of 40% of GDP.
Gaolathe added that while the increase may raise short-term concerns about credibility, these concerns are outweighed by the far greater economic risks that would result from severe fiscal austerity. He stressed the need to accelerate economic diversification and strengthen non-mining sources of growth.
