Botswana Unveils Stimulus Budget to Drive Economy and Infrastructure

Botswana anticipates a rebound in economic growth this year and has outlined plans to bolster infrastructure development through a “stimulus” budget, announced Finance Minister Peggy Serame on Monday.

The southern African nation, heavily reliant on diamond exports which contribute 30% of its revenue and 70% of its foreign exchange earnings, faced economic challenges due to a decline in diamond demand last year.

Serame revealed in her budget speech that economic growth for 2023 was estimated at 3.2%, lower than the previous forecast of 3.8%. However, growth is projected to accelerate to 4.2% in the current year and further to 5.4% in 2025, contingent upon a global economic recovery.

Highlighting the fiscal stance, Serame stated that the budget deficit for the fiscal year 2024/25 is estimated at 8.69 billion pula ($631 million), surpassing the current fiscal year’s projected deficit of 7.13 billion pula.

The proposed budget emphasises addressing infrastructure gaps, with a particular focus on the water, transport, and energy sectors. Serame emphasised that spending on infrastructure development would increase by more than 33% in the 2024/25 fiscal year.

To mobilise additional resources for financing these initiatives, the government plans to issue various instruments, including inflation-linked bonds and green bonds. This strategic move aims to diversify funding sources and align investment with sustainable development goals.

Botswana’s stimulus budget signals a proactive approach towards economic recovery and long-term growth, leveraging infrastructure development as a key driver. By prioritising strategic sectors and exploring innovative financing mechanisms, the government aims to stimulate economic activity, create employment opportunities, and foster sustainable development in the country.