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As a result of greater diamond sales and a recent rebasing of GDP statistics, Botswana now predicts economic growth of 9.7% in 2021, compared to the 8.8% anticipated in February, Finance Minister Peggy Serame stated on Monday. This year’s deficit is likely to rise to 3.9 percent, from 2.8 percent in February, she said.
As part of an effort to improve the accuracy of its measurement of economic growth, Botswana updated its real GDP accounting base year from 2006 to 2016. Rebasing has resulted in a significantly more severe decline in the economy last year, with an 8.5% decline instead of 7.9%, and a nominal GDP of 172,552 million pesos ($15.5 billion) that’s 4.6 percent lower.
“The larger than forecast contraction in 2020 is, however, expected to be offset by an improvement in growth in 2021 which has now been revised upwards to 9.7 percent growth for the year,” Serame said in response to emailed questions.
A combination of changes in the economy caused by Statistics Botswana in July 2021, as well as the robust performance of the diamond sector in the first half of 2021, she explained. De Beers and government-owned Debswana Diamond Company saw their rough diamond sales surge 41 percent in the first half of 2021 after declining 30 percent in 2020, thanks to strong demand from the United States and China, respectively.
According to Serame, the government is negotiating with the African Development Bank for a $130 million budget support loan, as part of a plan to tap into external and domestic borrowing sources to help fund the budget.