IMF CUTS BOTSWANA’S 2024 GROWTH FORECAST AMID DIAMOND PRODUCTION DECLINE

Sat 13 July 2024:

The International Monetary Fund (IMF) has reduced Botswana’s 2024 growth forecast to 1%, down from the previous estimate of 3.6% in April, primarily due to decreased diamond production, Reuters reported.

The IMF also anticipates the budget deficit to widen to 6% from 3.45% because of reduced mineral revenues. In response, the IMF has urged Botswana to consider slowing new infrastructure projects to stabilize the economy.

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“The continued economic slowdown is mainly due to a fall in diamond production,” the IMF stated on Friday. The organization suggested some fiscal relaxation is necessary given the drop in mineral revenues but recommended slowing the ambitious capital budget to manage the deficit and prioritize high-return projects.

The demand for diamonds has declined due to lower consumer demand and global economic weaknesses, impacting their traditional status as luxury items. Earlier this year, Finance Minister Peggy Serame projected a 4.2% economic growth, but the central bank later warned this target was unlikely due to ongoing challenges in the global diamond market.

Botswana relies heavily on diamond sales, which contribute 30-40% of revenue and 75% of foreign exchange earnings.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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