Analysis of Botswana’s 2025–26 budget proposals

Growth relies on diamond demand recovery and resilience in non-diamond mining, but external uncertainties, including geopolitical tensions and supply chain disruptions, pose risks. Inflation declined to 1.7 percent in December 2024 and is expected to stay within the three to six percent target range. The Bank of Botswana maintains an accommodative stance, keeping rates at 1.90 percent and lowering the reserve requirement to zero percent, but persistent external shocks could necessitate tighter policies. Foreign reserves have fallen to P53.6 billion, with only P2 billion available for government use, highlighting fiscal vulnerabilities. Whilst the budget acknowledges structural challenges such as unemployment and income inequality, it lacks bold strategies for economic diversification. Although non-diamond mining has shown resilience, sectors like agriculture, tourism, and manufacturing require stronger policy support to drive sustainable economic transformation.

Revenue generation and sustainability