Botswana now forecasts economic growth of 9.7% this year, compared to the 8.8% growth predicted in February, bolstered by increased diamond sales and the recent GDP account rebasing.

This is according to Botswana’s Finance Minister Peggy Serame who told Reuters news agency, adding that the 2021 budget deficit was forecast to increase to 3.9% from the 2.8% seen in February.

Last month, Botswana revised its real GDP accounts base year to 2016 from 2006, in a bid to boost the accuracy of its economic growth measurement.

It is because of this rebasing that 2020’s economic contraction is now far deeper, at 8.5%, as opposed to the 7.9% first reported. Nominal GDP is now 4.6% lower at 172,552 million pula ($15.5 billion).

“The larger than forecast contraction in 2020 is, however, expected to be offset by an improvement in growth in 2021 which has now been revised upwards to 9.7% growth for the year,” the Finance Minister said in response to a series of emailed questions.

Serame went on to add that the upward revision was down to several technical changes as a result of the GDP rebasing by Statistics Botswana in July this year, as well as the diamond’s sector’s robust performance during the first half of 2021.

Following a 30% decline last year, sales of rough diamonds by Debswana Diamond Company – a joint venture between the Botswana government and Anglo American’s De Beers – rose 41% in the first half of this year, driven by demand from major markets, China and the United States.

The Finance Minister added that the government was taking part in advanced discussions for a $130 million budget support loan from the African Development Bank, within plans to make the most of domestic and overseas borrowing sources to help fund the budget deficit.