“This growth outlook is premised on the recovery of the diamond industry, expected in the latter part of 2025, alongside continued positive sentiment in the non-diamond mining sectors,” Gaolathe said during a budget speech.
The southern African nation—the world’s leading producer of diamonds by value—faced a 3.1% economic contraction in 2024, a sharper decline than the government’s earlier projection of 1.7%. The downturn was largely attributed to weakened global demand for diamonds, particularly from China.
Diversifying Beyond Diamonds
Gaolathe echoed President Duma Boko’s call to reduce the country’s reliance on diamond revenues. Boko, who assumed office in November following a historic election victory, has emphasized the need to diversify the economy.
“Botswana’s reliance on diamond revenues has been both a strength and a vulnerability,” Gaolathe noted, highlighting plans to expand sectors such as tourism, agriculture, manufacturing, and energy.
Strategic Partnership with De Beers
In a significant development, Botswana and diamond giant De Beers recently concluded negotiations on a rough diamond sales agreement and extended their Debswana joint venture mining licenses until 2054.
Fiscal Outlook
Gaolathe revealed that the budget deficit for the 2025/26 financial year, running from April to March, is projected to decrease to 7.56% of gross domestic product (GDP), down from the current year’s estimated deficit of 9%.
As Botswana seeks to navigate a path of economic recovery, the government’s emphasis on diversification and strategic partnerships is expected to bolster growth and resilience in the years ahead.
