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Botswana’s credit rating was cut by S &P Global Ratings, another blow to its diamond-dependent economy that’s struggling with a slump in demand for its gems.
Botswana has set up a new sovereign wealth fund to drive economic diversification, create jobs and manage state companies.
The Southern African country, long viewed as an African economic success story, is in a slump because of a prolonged downturn in the global market for diamonds, its key export.
Emma Peloetletse, deputy board chair and a permanent secretary to the president, said the plan was to draw only from returns generated by the fund, not its capital investments.
Botswana’s credit rating was cut by S&P Global Ratings , another blow to its diamond-dependent economy that’s struggling with a slump in demand for its gems.
The country had its long-term sovereign credit rating cut one notch to BBB, the second-lowest investment grade, and S&P also gave it a negative outlook. Botswana still retained its rank as the highest-rated country in Africa, ahead of Mauritius.
The southern African country, the world’s biggest diamond producer by value, depends on the gems for about 80% of its income and a third of government revenue. Revenue from the stones is being slashed due to competition from cheaper, lab-grown equivalents that are gaining popularity in the US, the biggest diamond market.
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Botswana’s economy is likely to contract for a second consecutive year in 2025, with a fiscal deficit of 7.6%, S&P said. The ratings agency also forecast that government debt will rise to 34% of gross domestic product by 2028 from 6.3% in 2023.
