The International Monetary Fund (IMF) has reduced Botswana's 2024 economic growth projection from the April estimate of 3.6% to 1%, mainly due to decreased diamond production.
Reuters reports that the IMF advised the diamond-rich southern African nation to contemplate the postponement of major infrastructure projects to support the economy since the budget deficit is anticipated to increase from 3.45% to 6% as a result of a decrease in mineral earnings.
It said that the execution of the ambitious capital budget should be slowed down to manage the deterioration of the deficit and prioritise projects with the highest returns, even though some fiscal relaxation is needed this year due to weak mining revenues.
Diamonds, which are generally considered luxury commodities, have experienced a decline in demand due to global economic difficulties and decreased consumer demand.
Finance Minister Peggy Serame predicted that the economy would expand by 4.2% in February. However, the central bank issued a warning a few months later, indicating that this target was unlikely to be achieved as a result of the ongoing challenges in the global diamond market.
Diamond sales account for 30 to 40% of Botswana's revenue and 75% of its foreign exchange earnings.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
