Botswana may have bought itself some breathing room on the external front, but it has not escaped the underlying fiscal problem created by the diamond downturn. According to Nikolaus Geromont, Fixed Income and Currency Strategist at Absa Group, recovering reserves and a healthier balance of payments have reduced the risk of a foreign exchange shortage. However, an 8.9 percent fiscal deficit and heavier reliance on domestic bond issuance are increasingly placing the spotlight on government finances and the local debt market.
Speaking at the recent Business Banking Risk Management Seminar hosted by Absa Bank Botswana, Geromont noted that the country's trade balance has improved since 2024. Exports have been driven by a tentative global revival in diamond trade from 2024, when a severe downturn in global demand for diamonds reduced them, while imports have remained relatively contained. Multilateral funding – including from the World Bank, the African Development Bank, and the OPEC Fund – has provided additional inflows, and foreign reserves have recovered to approximately $4 billion.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
