Botswana is considering scaling back on spending related to new vehicle purchases and official travel for government personnel and may also postpone certain capital projects in response to a decline in diamond revenues.

This is according to the country’s finance minister, who stressed that these measures are being explored as part of a broader strategy to manage the financial impact of the downturn in the diamond industry, which has long been a cornerstone of Botswana's economy. 

Consequently, the government is actively seeking ways to optimise resources and prioritise essential spending to navigate the economic challenges posed by the fall in diamond-related income.

“We have to seriously reduce the pace of spending, and we are looking at areas such as procurement of vehicles, computers, workshops and travel that is funded by government,” Botswana’s finance minister Peggy Serame told lawmakers on Monday. 

Furthermore, according to Serame, budget revenue in the first quarter of the fiscal year, which began in April, fell approximately 28% short of the targeted 23.4 billion pula ($1.7 billion).  

“If things do not improve, we will also have to look at delaying some projects that we had planned,” she went on to say.

Botswana, known as the world's leading producer of rough diamonds by value, relies heavily on diamond revenues for a significant portion of its national budget, Bloomberg reports.

However, global diamond sales have been adversely affected by an oversupply of diamonds, weak demand from the critical Chinese market, competition from lab-grown gems, and consumers feeling the strain of inflation.

The budgetary challenges are arising just as the country readies for its upcoming elections in October, where President Mokgweetsi Masisi is seeking re-election. 

These financial pressures could play a significant role in the political landscape as the election approaches.