An International Monetary Fund (IMF) team, led by Luc Eyraud, Division Chief in the IMF African Department and Mission Chief for the Republic of Botswana, visited Gaborone and held discussions on the 2024 Article IV consultation from July 2-12, 2024.

At the conclusion of the discussions, Eyraud issued the following statement, “Botswana’s economic growth decelerated from 5.5 percent in 2022 to 2.7 percent in 2023, below the long-run potential growth of 4 percent. A sharp decline in diamond trading and mining activities was the main contributor to the slowdown, as global demand for rough diamonds decreased.

Despite the weak diamond market, the external position improved last year because of strong customs union revenues. Botswana’s economic growth is expected to slow to 1 percent in 2024, primarily because of a diamond market contraction.

“Inflation has remained below the ceiling of Bank of Botswana’s (BoB) objective range since spring 2023. After peaking at 14.6 percent in August 2022, inflation declined rapidly, mainly as a result of falling oil prices. The BoB has cut its policy rate twice by a cumulative 50 basis points since December 2023, following the 151 basis points increase that took place during 2022.

“On the budget side, there was significant fiscal relaxation in FY2023, mostly due to a decline in mineral revenues and higher capital spending. The fiscal position was loosened from a budget balance in FY2022 to an estimated 4.7 percent of GDP deficit in FY2023. Public debt remains low (20 percent of GDP), but government deposits at the central bank have been significantly depleted.