Gaborone — Recent months have seen a robust recovery in the international diamond industry which will hopefully underpin strong growth in Botswana next year.
Minister of Finance and Economic Development, Dr Thapelo Matsheka said this in a virtual bilateral meeting with World Bank vice president for eastern and southern Africa, Dr Hafez Ghanem, on Monday.
“Based on these developments, we are forecasting a GDP growth rate of 7.7 per cent in 2021,” he said.
He said COVID-19 had impacted massively on Botswana’s economy primarily due to severe contraction of the country’s two major sources of revenue – diamond industry as well as travel and tourism.
Lockdowns, domestic movement and international travel restrictions combined with badly affected global consumer markets had severely hindered economic activity, he said.
The minister said the country’s Gross Domestic Product (GDP) fell by 24 per cent in the second quarter.
“For 2020 as a whole, we expect GDP to shrink by around nine per cent. Our revenues are projected to fall from P62.4 billion to P52.3 billion in 2020/21 primarily due to a decline in mineral revenue from P20 billion to P10.5 billion.
This worsened the budget deficit, which was initially projected to be P5.2 billion and is now projected to be P13.6 billion,” said Dr Matsheka.
Dr Matsheka noted that Parliament approved the Economic Recovery and Transformation Plan in September intended to support recovery and growth adding that preparatory work for transformative projects implementation had commenced.
“Furthermore, government approved an industry support facility to the tune of P1.3 billion.
The facility will support general business with operating expenses and address other critical needs,” said Dr Matsheka.
The minister said government had developed a comprehensive financing plan to pay for the economic recovery package, including raising its borrowing limits.
He explained that the financing package included domestic as well as external sources of funding, such as the World Bank.
Dr Matsheka commended the bank for mobilising resources to help countries procure COVID -19 vaccines when they became available.
Acknowledging challenges experienced in the delivery of infrastructural projects, Dr Matsheka however said government planned to fast track progress on integrated transport and emergency water security projects which were both behind schedule.
“We committed to engaging the World Bank further in facilitating our pipeline projects, with much interest in how the bank can assist in the country private sector diagnostic, the digital economy assessment and international finance corporations’ support for our public private partnership (PPP) programme,” said Dr Matsheka.