Image credit: De Beers
Botswana is expected to narrow its budget deficit to 5.9% of Gross Domestic Product (GDP) in 2021 from 7.89% this year due to a recovery in diamond revenue.
Reuters cited the country's 2021 Budget Strategy Paper, which showed that mineral revenues for the 2020 fiscal year that ends in March 2021, were expected to halve to $917.70 million as COVID-19 hurts diamond sales.The global diamond market was, however, showing signs of recovery with a 50% rise in diamond receipts to 15 billion pula in 2021.
Higher diamond income and increased taxes are expected to lift total revenue 12% to 58.8 billion pula in 2021 while spending will rise 5% to 71.4 billion pula, resulting in a deficit of 12.58 billion pula or 5.9% of GDP.
"At this rate, the deficit still exceeds the country's indicative threshold that a budget deficit in any year should not exceed 4.0% of GDP," the document said.
"On a more positive note, however, there has been a robust recovery in diamond trading in September 2020, which if sustained would underpin a stronger recovery through the rest of the year and into 2021," reads the 2021 Budget Strategy Paper.
Botswana economy is expected to record a growth rate of 7.7% in 2021, from this year’s contraction of 8.9% on improved sentiment in the global diamond industry, as well as the lifting of domestic movement and lockdown restrictions.
Global firm De Beers, which gets about 70% of its supply from Botswana, recently reported a 57% jump in sales to $467 million at its September sight.
De Beers said it had received higher retail orders ahead of the holiday season.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
