Weak diamond exports trigger P2bn trade deficit

Brian Benza | Wednesday February 3, 2016 15:59

 

Due to the low exportation of rough diamonds from the aggregation process, total exports were valued at P2.3 billion in November, a decrease of 50.3 percent from the October 2015 value of P4.6 billion.

“As a result of rough diamonds from the aggregation process not being exported on a monthly basis, fluctuations in the value of total exports are observed. Values are high during the months when rough diamonds from the aggregation process are exported and are low when there is insignificant exportation from the aggregation process,” stated Statistics Botswana.

On a year-on-year basis, total exports for November 2015 showed a fall of 61.5 percent from the November 2014 value of P6.1 billion.

Comparison of November 2015 import figure to November 2014 import value shows a drop of 35.6 percent to P4.3 billion recorded during the reference month.

Figures presented by Finance Minister, Kenneth Matambo during Monday’s budget speech showed that the preliminary overall balance of payments for 2015 is estimated at P3.3 billion as at November 2015, a decrease from P11.4 billion recorded in 2014.

The current account surplus is estimated to fall from P22.9 billion in 2014 to P12.9 billion in 2015.

“The positive contribution of net inflows of receipts from the Southern African Customs Union (SACU) to the current account balance is expected to be offset by the trade deficit,” said Matambo.

Exports of goods and services are estimated to decrease by 18.6 percent in 2015, due to weak global demand for rough diamonds, while imports are also projected to decline by 8.1 percent in 2015.

De Beers, which sells all of its diamonds from Botswana after aggregated production from other countries, saw rough diamond sales slumped 40 percent to 20.6 million carats in 2015 as market weakness and lower diamond manufacturing levels took their toll.

The decline in sales volumes coincides with a 12 percent drop in production to 28.7 million carats over the previous year as the miner reduced rough output in response to trading conditions. Rough diamond sales hit rock bottom in 2015 due to an ‘indigestion’ in the diamond pipeline as cutters and polishers, who suffered from low polished prices, pooled rough diamonds.

Production at Debswana Diamond Company also took a 16 percent knock to 20.4 million carats in 2015 as the mining giant was forced to trim output due to weakening global demand.

However, 2016 prospects seem brighter after De Beers recorded a 114 percent rise in sales at its first sight of the year held in Gaborone recently.