IMF warns Botswana against buying De Beers
Mbongeni Mguni - Lewanika Timothy | Monday December 15, 2025 06:10
President Duma Boko and the Minerals and Energy ministry are reportedly hammering out an agreement with financiers to support the country’s bid to takeover Anglo American’s 85% stake in De Beers. Such a move would hand Botswana absolute control of the diamond giant and Boko has said he would then accommodate equity requests from other strategic players such as Angola. Anglo's stake in De Beers is estimated at between $3 billion and $5 billion.
This week, researchers at the IMF concluded that Botswana’s fiscal position is in choppy waters, marred by dwindling revenues coupled with pressures from rolling deficits.
The IMF researchers, who were in Botswana in September conducting their biannual discussions with various economic players, directly advised government not to pursue the full Anglo American stake.
“Staff cautioned the authorities against increasing their stake in De Beers, given the fiscal situation and Botswana’s already high dependence on the diamond sector,” the researchers said in their detailed report released this week. “If downside risks related to Botswana’s exports were to materialise, the authorities may need to undertake additional consolidation measures to compensate for weaker revenue, and consider allowing a faster pace of depreciation.”
The IMF’s risk assessment shows that the recovery in the diamond market remains uncertain.
“This risk is compounded by the fact that the government has expressed interest in increasing its 15percent participation in De Beers,” the researchers said.
Despite the advice to government, the IMF said the current efforts by producers, led by Botswana, to better market and distinguish natural diamonds from the synthetics, would anchor a gradual recovery of the industry. This revival would also be assisted by the continuing fall in prices of the synthetics.
“Demand for natural diamonds is expected to gradually recover over the medium term, although amidst heightened uncertainty. “Although more gradual than the one envisaged at the time of the 2024 consultation, a partial recovery is forecast over the medium term, as efforts to differentiate natural and lab-grown diamonds are assumed to gradually bear fruit. “This is more likely to be the case if lab-grown diamonds prices continue to fall and, in contrast to natural diamonds, are no longer considered a luxury good,” the researchers said.
Anglo American expects to finalise a shortlist of bidders soon, who will be given access to the data room as part of the process to finalise the sale of its stake in De Beers.
Boko recently doubled down on his plans to fully takeover the Anglo stake, saying “concrete steps” were under way towards the acquisition. The president said while his administration is pushing for diversification of the mining sector, “diamonds will continue to be a main contributor of economic growth and transformation for our country” and were thus a strategically important asset.
Meanwhile, reports emerging from the Finance Ministry paint a build up of frenetic activity ahead of the budget, which traditionally is publicly presented in the first week of February, about two months away.
Ministry insiders said the prolonged diamond drop and fiscal crunch that has forced a ‘hand-to-mouth’ situation in government this year, was playing havoc with technocrats’ ability to accurately forecast and produce a budget for the next financial year.
“The budget strategy paper which usually comes out in September, has thus far not been finalised, while the different budget pitso have also not been held, showing that there are difficulties in the numbers,” an insider told Mmegi.
Vice President, Ndaba Gaolathe, who is also the Finance Minister, was expected to table the country’s inaugural mid-term budget review statement, indicating the course of the fiscal year and revisions for the balance. However, with Parliament due to adjourn ahead of the holidays, it remains unclear when or whether the statement and new figures will be delivered.
Speaking recently an estimates committee meeting, Finance Ministry permanent secretary, Tshokologo Kganetsano, described the fiscal situation as dire.
“Every day we have to firefight and that is because we have been too dependent on a single commodity. “We implemented austerity measures relating to travel, relating to overtime and we centralized the generation of GPOs, which has somewhat helped, but we are seeing a growing appetite for spending across all ministries. “We are still either in denial or we don't seem to appreciate that the situation requires that we tighten our belts. “You cannot spend that which you do not have andthat is the bottom line. “You cannot depend on borrowed money to run your affairs as a country.”
Meanwhile, the IMF has called on government needs to further cut spending and urgently implement other fiscal reforms in order to avoid a debt spiral and manage the budget deficit.
IMF researchers said the prolonged slump in rough diamonds had pushed the country’s economy to a critical juncture.
“With external reserves declining rapidly and fiscalbuffers all but depleted, action is needed urgently to arrest this deterioration and stabilise the macroeconomic outlook,” the IMF said.