Botswana Widens Budget Deficit to 3.8% as Diamond Revenue Slides

  • Growth set to rebound this year, finance minister says
  • Government to restrict future budget deficits to 4% of GDP

Botswana will widen its budget deficit to 3.8 percent of gross domestic product in the fiscal year beginning April 1 as demand wanes for its main export, diamonds.

The shortfall of 6.05 billion pula ($530 million) compares with a deficit of 4.2 billion pula, or 2.8 percent of GDP in the year ending March 31, Finance Minister Kenneth Matambo told lawmakers in his budget speech on Monday in Gaborone, the capital. That was the first deficit in four years.

Botswana’s economy has been battered by falling prices for diamonds and other commodities it produces, such as nickel, copper, coal and iron ore. Growth is forecast to rebound this year to 4.2 percent from an estimated 1 percent in 2015, Matambo said.

Revenue is set to decline 6.5 percent to 48.4 billion pula in the coming year, while expenditure is forecast at 54.4 billion pula.

The government plans to tap its foreign-currency reserves and borrow more from local and foreign markets to fund the deficit, Matambo said. Future deficits will be restricted to 4 percent of GDP to prevent the nation “sliding onto an unsustainable fiscal path,” he said.

— With assistance by Mbongeni Mguni, and Nasreen Seria

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