|Expectations for a continued decline in diamond demand have led Botswana's Finance Ministry to cut its economic growth forecast for 2015 to 2.6 percent, compared with a projection of 4.9 percent which was made at the beginning of the year, according to a report by Bloomberg.
The economy of Botswana, home to some of the highest-value diamond productions in the world, still relies heavily on its diamond revenue, despite ongoing efforts by government to diversify and develop other sectors.
"The downside risk to the projections continues to be the country's high dependence on diamonds, whose demand and prices are subject to global fluctuations," the Finance Ministry said, as quoted by Bloomberg. The country's budget for 2015-16, which was originally expected to have a surplus of 1.2 billion pula (US$118 million), is now expected to reach a deficit of 4 billion pula (US$394 million). A March 2015, "Systematic Country Diagnostic" report published by the World Bank warns that "the country remains reliant on a diamonds and public sector driven model. This makes it vulnerable both to short term shocks and structural changes." The report also forewarns that, in the medium term, diamond revenues will decline, which will in turn "raise fiscal and external vulnerabilities."