An IMF mission led by Édouard Martin concluded its annual Article IV consultation in Gaborone last week, warning that the economy is set to contract by around 1% in 2025, after a 3% decline last year. This follows a 24% fall in mining output in 2024, as the industry struggles with lower demand from China and rising competition from lab-grown diamonds.
Non-mineral growth has also slowed, registering just 2.8%, while fiscal and external balances have weakened. The current account moved from a surplus of 1.5% of GDP in 2023 to a deficit of 4.2% in 2024, and international reserves fell to about five months of import cover.
On the fiscal side, the deficit widened to 7.1% of GDP in 2024/25, driven by lower mineral revenues and higher recurrent spending. Public debt has now climbed above 30% of GDP. Inflation has remained below the Bank of Botswana’s 3–6% target range, but is expected to pick up in the coming months following a recent depreciation of the Pula. The central bank has kept its policy rate unchanged at 1.9% since August 2024.
While Botswana’s banking sector remains well capitalised and profitable, the IMF cautioned that liquidity has tightened, urging the authorities to speed up implementation of financial sector reforms.
Martin said growth and job creation will depend on a “fundamental shift” towards greater private sector participation, a more diversified export base, and a leaner public sector.
The Fund welcomed government initiatives under the Botswana Economic Transformation Programme, but called for further reforms in revenue mobilisation, state-owned enterprise management, and reducing bureaucratic barriers for business.
“With the right reforms, growth could recover to more than 4% in the medium term,” Martin noted, emphasising the importance of aligning the measures with the country’s new five-year National Development Plan.
–IMF/ChannelAfrica–
