S&P Global Ratings has downgraded Botswana’s long-term sovereign credit rating to BBB- from BBB, citing structural weakness in the global diamond market that will weigh on the minerals-dependent economy longer than previously expected.
The ratings agency also cut the country’s short-term ratings to A-3 from A-2 and maintained its negative outlook, said Reuters in an article on March 13.
Botswana is the world’s second-largest producer of rough diamonds, a sector that historically accounted for about 70% of exports and one-third of government revenues. It now faces mounting pressure from synthetic diamonds and weak Chinese demand. Lab-grown stones have captured 20% of the global market by value and up to 50% by volume in the US engagement ring segment, said the newswire.
S&P projected sizable fiscal deficits through 2029 absent a strong demand recovery or significant policy adjustment, with the deficit expected to reach 8.9% of GDP in 2026/27.
State mining company Debswana cut and suspended production at several mines last year, with output falling 27% to 17.9 million carats in 2024 and a further 16% to 15.1 million carats in 2025 — roughly 40% below 2023 levels. Production is expected to remain flat at around 15 million carats in 2026.
S&P forecast economic growth of only 2.5% in 2026, following contractions of 2.8% and 0.4% in the preceding two years.
