Botswana government estimates that its economy will grow at a rate of 4.3% in 2022, according to a budget strategy document published on Thursday, as the country emerges from the pandemic and reaps the benefit of higher commodity prices.
The document, presented by the Finance Ministry, estimated a GDP growth of 4.2% in 2023.
The resource-rich country heavily relies on diamond mining, which accounts for a fifth of its GDP and more than two-thirds of its foreign exchange income.But its over-dependence became its biggest vulnerability when the coronavirus crisis crashed diamond prices and demand, forcing the economy to shrink by almost 8%.
The prices have recovered now and ratings agency S&P last week revised its outlook to stable from negative, saying an economic rebound, supported by a strong diamond sector recovery, will lead to an improvement in fiscal and external performance over the next two years.
However, despite the higher GDP projection, Botswana expects its budget deficit to widen to 4% of GDP in 2022 from 3.7% in 2021, the document showed, adding that deficit financing will push public debt to 26.8% of the GDP in 2022 from 22.4% in 2021.
It also revised down its 2021 mineral revenue forecast to 20.2 billion pulas ($1.81 billion) from 23.1 billion pulas, the document showed.