Botswana economy downgraded from stable to negative by Moody’s
Botswana’s economic outlook has been downgraded from stable to negative by Moody’s, as a result of the prolonged downturn in the diamond industry.
In March, S&P Global Ratings (S&P), another of the “Big Three” credit rating agencies, made the same downgrade, forecasting a steep rise in government debt.
Botswana, the world’s biggest rough diamond producer since Russia was hit by G7 sanctions, relies on diamonds for 80% of its export revenue and 30% of its GDP.
Moody’s said Botswana’s economy had contracted by between 3.1% and 3.3% in 2024, primarily due to a 52% drop in diamond sales by Debswana, the joint venture between the government and De Beers – and a 33% decline in diamond exports.
“The prolonged downturn in the diamond sector is exerting pressure on Botswana’s economic growth prospects, exports and government revenues,” said Moody’s in its rationale for the negative outlook.
“Demand for polished diamonds remains subdued due to slowing global demand and changing consumer preferences, while structural shifts, including the growing popularity of lab-grown diamonds, are likely to continue to erode the industry’s long-term profitability and its contribution to the economy and government finances.”
It forecast a rapid increase in government debt and a weakening of debt affordability, and cautioned that previous government attempts to diversify the economy and revenue base had yielded mixed results.
Botswana finalised a diamond sales deal with De Beers in February 2025, extending mining licenses for until 2054 and granting the government a larger share of diamonds.
However, De Beers has slashed production guidance by up to 40% for 2025, reflecting continued market challenges.
