$300m Loan to Stabilize Botswana's Economy
May 28, 25
(IDEX Online) - Botswana is borrowing $304m from the African Development Bank (AfDB) as falling diamond prices threaten its economic stability.
The loan, approved last week, is part of a broader $1bn support package announced in April.
Botswana, now the world's biggest rough diamond producer (since Russia was hit by G7 sanctions), relies on diamonds for 80 per cent of its export revenue and 30 per cent of its GDP.
But sales by Debswana, the joint venture between its government and De Beers, fell by more than half last year.
The economy shrank by 3.1 per cent, the country's credit rating has been downgraded and its budget deficit has widened to 9 per cent of GDP, the highest since the pandemic. Foreign reserves have almost been wiped out.
The loan from the AfDB, headquartered in Abidjan, Ivory Coast, will finance the Governance and Economic Resilience Support Programme (GERSP), a one-year general budget support operation to address fiscal challenges and promote private sector growth in Botswana.
"This operation comes at a critical time for Botswana," said Moono Mupotola, the bank's deputy director general for southern Africa and country manager.
"We will work with the new administration to implement reforms that will deepen fiscal sustainability, strengthen transparency, and create a more business-friendly environment for economic diversification."
Pic shows the African Development Bank HQ in Ivory Coast.