GABORONE (Reuters) – Botswana’s economy will recover in 2016 after falling last year, but its budget deficit will widen as revenue from diamond mining continues to slide, the finance minister said on Monday.
Botswana, the world’s biggest producer of diamonds, where diamonds account for around 75 percent of its foreign exchange earnings and 30 percent of GDP, slashed its 2015 growth forecast as a sharp drop in prices of the precious stone hit the economy.
Finance Minister Kenneth Matambo told parliament during his 2016/17 national budget speech that the economy is expected to grow by 4.2 percent this year after slowing to 1 percent in 2015 due to falling diamond production, water and power shortages.
The southern African nation would record a budget deficit of 3.2 percent of gross domestic product, or 6.05 billion pula ($529 million), compared to previous forecast of a 2.6 percent shortfall, Matambo said.
Matambo said that an economic stimulus package released last December, along with a recovery in the global economy, would help lift Botswana’s growth this year.
In December, Matambo’s ministry presented an unscheduled budget asking government for an additional 1.34 billion pula for the 2015/16 financial year to fund measures to cope with the water and power shortages.
($1 = 11.4286 pulas)