The International Monetary Fund (IMF) has reduced Botswana's 2024 growth forecast to 1%, down from the previous estimate of 3.6% made in April, primarily due to decreased diamond production, according to the latest statement.

The budget deficit is also projected to increase to 6% from 3.45% due to a decline in mineral revenues. This has prompted the diamond-rich southern African nation to consider delaying new infrastructure projects to support the economy.

“The continued (economic) slowdown is mainly due to a fall in diamond production,” said the IMF in a statement.

“Some fiscal relaxation is warranted this year given the fall in mineral revenues, but the execution of the ambitious capital budget should be slowed down to contain the deterioration of the deficit and prioritise projects with the highest returns,” the IMF went on to add.

Decreased consumer demand and global economic weakness have reduced the outlook for diamonds, traditionally considered luxury items, Reuters news agency reports.

In February, Finance Minister Peggy Serame projected a 4.2% economic growth, but a few months later, the central bank cautioned that this target was unlikely to be achieved due to ongoing challenges in the global diamond market.

Botswana derives 30-40% of its revenue and 75% of its foreign exchange earnings from diamond sales.