June 6 (Bloomberg) -- Botswana's Finance Minister Baledzi Gaolathe said diamond demand is still ``reasonable,'' even as economic growth slows in the U.S., the world's biggest consumer of the gems.

Faster economic growth in Asian countries, such as China, is helping to offset lower diamond sales in the U.S., Gaolathe said in an interview with Bloomberg television in Cape Town, where he is attending the World Economic Forum.

Botswana, the world's biggest diamond producer, earns about 75 percent of its export revenue from the gems. The government is trying to reduce its reliance on mining by promoting investment in industries including agriculture and tourism. Diamonds account for about two-thirds of government revenue.

``We were concerned that if a slowdown in the U.S. economy continues, demand for diamonds in the U.S. will weaken,'' Gaolathe said. ``So far, demand is still reasonable. We are hopeful that despite the problems in the U.S. the diamond industry will continue to sell all its production.''

Botswana's diamond industry is run by De Beers, the world's biggest producer of the gems, through Debswana, a joint venture with the government. Diamond output will remain unchanged at about 33 million carats this year, Debswana said on March 12.

The government is sticking to its economic growth target of 6.8 percent a year until 2016, even after oil prices rose to a record and food costs increased, Gaolathe said. The economy grew 6.2 percent in the year through June 2007, the most recent data available.

``It's not our intention to revise the growth target,'' Gaolathe said. ``Other sectors that are not directly affected'' by rising food and energy costs ``will be promoting growth.''

Nickel Project

A June 4 announcement by OAO GMK Norilsk Nickel, the largest producer of the steel additive, to abandon a project to refine the metal in Botswana was a ``temporary setback,'' Gaolathe said. The government is still ``anxious to have this project'' and will ``continue to consult,'' he added.

Norilsk said it ended the project because of rising costs. The government owns 15 percent of the project, which was forecast to cost $498 million two years ago.

Botswana, with a population of 1.7 million, borders South Africa, Namibia and Zimbabwe. Its Aa3 rating by Moody's Investors Service is the highest credit rating of any country in Africa.

The government has no plans to devalue the pula, which is pegged to a basket of currencies, Gaolathe said. The pula traded at 6.577 against the dollar late yesterday.

To contact the reporters on this story: Nasreen Seria in Cape Town at nseria@bloomberg.netMike Cohen in Cape Town at mcohen21@bloomberg.net;

Last Updated: June 6, 2008 04:59 EDT