Gov't to tighten spending further on diamond revenue slump
Lewanika Timothy | Wednesday August 20, 2025 06:00
He said they have already managed to slow down expenditure by P5.5 billion between November 2024 and June 2025, and would continue consolidating spending to protect the economy from worsening fiscal pressures. “Having successfully slowed spending by P5.5 billion in the past eight months, we must now move to further slow expenditure and cement fiscal consolidation,” Gaolathe, who also doubles as the Vice President, said. The minister’s comments come amid a prolonged slump in the diamond market that has severely affected Botswana’s key revenue stream. Diamonds account for about 30% of government revenues and more than 70% of foreign exchange earnings. However, demand has weakened globally, forcing Debswana, the joint venture between Botswana and De Beers, to cut production and temporarily halt operations at some mines. The result has been a knock to the economy and a growing fiscal deficit. Botswana’s economic growth forecast for 2025 has been revised down to near-zero, from an earlier projection of 3.3 percent. The budget deficit is expected to reach 7.56 percent of GDP for the 2025-26 fiscal year. Gaolathe told lawmakers that government will rebuild financial buffers by controlling operational costs and prioritising essential services. He did not provide specific new cuts, but pointed to areas such as official travel, procurement, and fleet management that have previously been targeted for cost savings. The government has already introduced measures to broaden the tax base and improve compliance, including proposed digital economy levies and enhanced revenue collection through the Botswana Unified Revenue Service. Despite the cuts, the 2025-26 national budget is projected to rise slightly to about P97 billion, up from an estimated P93 billion in 2024-25. Gaolathe has said the increase will be managed through improved efficiencies and better targeting of development spending. He reiterated the urgent need for economic diversification to reduce reliance on diamond exports, pointing to tourism, agriculture, manufacturing, and energy as priority sectors. “We must live within our means and build a more resilient economy,” Gaolathe said. The fiscal tightening comes as government seeks to reassure investors and ratings agencies amid rising debt levels and external economic risks.