Botswana Budget Surplus to Widen Even as Economic Growth Slows

Botswana’s budget surplus probably will widen next year even as economic growth in the world’s biggest diamond producer slows, Finance Minister Kenneth Matambo said.

The southern African nation will have a surplus of 1.2 billion pula ($125 million), or 0.8 percent of gross domestic product, in the year through March 2016, Matambo said in his budget speech to lawmakers on Monday in Gaborone, the capital. That compares with an expected surplus of 281 million pula this fiscal year and 7.2 billion pula in the previous year, he said.

“This modest surplus will contribute to rebuilding the country’s net financial assets and provide a cushion against future financial shocks such as happened during the global financial crisis,” Matambo said.

The economy of Botswana, which has the highest credit rating in Africa, will probably expand 4.9 percent this year, down from 5.2 percent in 2014, the minister said.

Diamonds mined by the Debswana Diamond Co. Ltd., a government venture with Anglo American Plc’s De Beers unit, have helped to transform Botswana from a poor, cattle-ranching society into one of Africa’s success stories. It had an estimated per capita gross domestic product in 2013 of $16,400, higher than Mexico and Turkey, according to the Central Intelligence Agency.

Botswana’s balance of payments probably showed a surplus of 10 billion pula last year, compared with 1.3 billion pula in 2013, due to an increase in money received from the Southern African Customs Union, Matambo said. This helped to increased foreign exchange reserves by 16.5 percent to 79 billion pula by the end of December.

Faster Growth

Economic growth accelerated in the third quarter to 5.4 percent as mining output rose 7.4 percent, the statistics agency said on Dec. 22. Mining probably will account for 29 percent of government revenue in the next fiscal year, Matambo said.

President Ian Khama won a second term in office in October. Khama’s Botswana Democratic Party has ruled the country for almost 50 years.

Botswana has an A2 credit rating at Moody’s Investors Service, with a stable outlook. The pula, which is pegged to a basket of currencies including South Africa’s rand, gained 0.1 percent to 9.63 against the dollar as of 3 p.m. in Gaborone.

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