Standard & Poor’s  (S&P) Global Ratings  confirmed  an “'A-/A-2' long- and short-term foreign and local currency sovereign credit ratings on the Republic of Botswana” the organisation announced last week. However, the agency’s outlook for the country remains negative.

S&P noted that the Botswana Government’s fiscal deficit is narrowing on the back of an improving diamond market and what it referred to as “temporarily increased” revenues as a result of higher sales and reduction of stocks.

The agency estimated that the country’s GDP would grow at least at a rate of  3% in the medium term,  given a stable diamond sector and growth in other areas like agriculture, construction and the service sector.

The negative outlook on Botswana has been maintained due to  the country’s  dependence on diamonds and the possibility of the  sector underperforming.

“The negative outlook reflects our view that economic growth performance and fiscal outcomes could be weaker than we currently expect over the next 12 months, barring a structural improvement in international diamond prices to support higher production levels,” S&P said.

The agency further noted: “Botswana is one of the world's largest rough diamond producers, and the diamond mining industry remains its main economic locomotive. The diamond sector contributes just under one-third of Botswana's GDP, over one-third of its fiscal receipts, and more than two-thirds of exports. ..... Nevertheless, the economy remains exposed to a weak performance in the diamond sector, which could hurt economic growth prospects and potential fiscal adjustment.”