Botswana Mining Review Comprehensive Coverage of the Progress and Achievements in the Mining Sector
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Botswana has been stripped of a notch on its sovereign credit rating as S&P Global Ratings warned that the country’s deep dependence on diamonds is extracting a heavier and more prolonged toll than previously anticipated.
The ratings agency lowered Botswana’s long-term foreign and local currency sovereign credit ratings to ‘BBB-‘ from ‘BBB’, with the short-term rating cut to ‘A-3’ from ‘A-2’. The outlook remains negative, a signal that further downgrades remain on the table if fiscal and external conditions continue to deteriorate.
The diagnosis is structural. Diamonds historically account for around 70% of Botswana’s exports, roughly a third of government revenue and approximately a quarter of GDP. That concentration, once a source of extraordinary prosperity, has become a vulnerability as global demand for natural stones weakens on multiple fronts. Prices have fallen sharply from their 2022 peaks, squeezed by changing consumer preferences, broader luxury spending slowdowns in key markets such as China and the rapid ascent of lab-grown diamonds, which captured an estimated 20% of the global market by value and as much as 50% of the US engagement ring market in 2025.
The economic damage is already visible. S&P estimates Botswana’s economy contracted for a second consecutive year in 2025, with a 56% year-on-year plunge in diamond production during the final quarter offsetting earlier gains. Output from Debswana Diamond Company, the joint venture between the Botswana government and De Beers is expected to fall to roughly 15 million carats in 2026, down from approximately 25 million carats in 2023.
Public finances have taken the strain. The general government deficit is projected to reach 8.9% of GDP in the 2026/27 fiscal year, only marginally below the estimated 9.3% recorded the previous year. Net government debt, which stood at a net asset position just a few years ago, is forecast to climb to 37.4% of GDP by 2029. Yields on short-term Treasury bills have surged from around 3.4% at the start of 2025 to above 10% by early 2026, reflecting growing reliance on domestic borrowing. Foreign exchange reserves have meanwhile fallen to approximately $3.8 billion, down from roughly $7.5 billion in 2017.
S&P forecasts a modest economic recovery, with growth of 2.5% in 2026 and an average of around 3.2% between 2027 and 2029, projections that assume some stabilisation in diamond markets but no return to former peaks.
The ratings agency acknowledged Botswana’s considerable institutional strengths. Its democratic governance, stable policy framework and the orderly transfer of power following the October 2024 elections, which brought the Umbrella for Democratic Change to office remain meaningful credits.
The new government has outlined diversification ambitions through the Botswana Economic Transformation Programme and National Development Plan 12, targeting growth in tourism, agribusiness, renewable energy and technology. S&P was measured in its assessment of those efforts, noting that diversification will take time to deliver results. Until it does, Botswana’s narrow economic base leaves it exposed to the same commodity cycles that have defined and now disrupted its remarkable development story.
