The International Monetary Fund (IMF) has significantly reduced Botswana’s 2024 growth forecast to 1% from an earlier estimate of 3.6%, primarily due to lower diamond production.

The IMF also anticipates the budget deficit to widen to 6% from 3.45% as a result of declining mineral revenues. In a statement, the IMF urged the diamond-rich southern African nation to consider slowing down new infrastructure projects to stabilize the economy.

The organization suggested that some fiscal relaxation is justified this year given the decline in mineral revenues but recommended slowing the execution of ambitious capital projects to manage the deficit and focus on those with the highest returns.

Lower consumer demand and global economic weakness have impacted the outlook for diamonds, traditionally considered luxury items.

In February, Finance Minister Peggy Serame projected a 4.2% growth for the economy, but the central bank later warned that this target was unlikely 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.