The International Monetary Fund (IMF) has cautioned Botswana to reconsider its plan to increase its stake in De Beers, warning that the country’s fiscal position and heavy reliance on diamonds make such a move risky The International Monetary Fund has warned Botswana that increasing its stake in De Beers could be risky, given the country’s heavy dependence on diamonds and fiscal vulnerabilities. In its 2025 Article IV Consultation released this week, the IMF highlighted a more uncertain macroeconomic outlook as the diamond sector experiences a sharper-than-expected contraction. The Fund cautioned that the government’s plan to raise its shareholding in De Beers from the current 15 percent comes at a time when the global diamond market’s recovery “remains uncertain.” “Staff also cautioned the authorities against increasing their stake in De Beers, given the fiscal situation and Botswana’s already high dependence on the diamond sector,” the report states.
The risks are both global and domestic. Internationally, Anglo American’s restructuring plan to divest its 85-percent shareholding in De Beers, announced in May 2024, is reshaping the diamond giant’s future. Anglo is shortlisting potential buyers in 2025, with a public listing also under consideration, potentially stretching the divestment process into 2026.
The IMF also noted that U.S. tariffs on Botswana’s diamond exports add to the uncertainty. Botswana faces a 15 percent tariff on rough diamonds shipped to the U.S., while countries that polish Botswana’s stones face an average 28 percent tariff, weighing heavily on demand and production projections.
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Domestically, the Fund warned that any further delay in fiscal consolidation could deepen vulnerabilities. “Possible further postponement of fiscal consolidation efforts is a substantial downside risk,” the Executive Board said. If Botswana’s export earnings weaken further, “the authorities may need to undertake additional consolidation measures…and consider allowing a faster pace of depreciation.” Under the consultation’s baseline scenario, public debt could climb rapidly, approaching 60 percent of GDP by 2030, while international reserves risk gradual depletion.
The diamond sector’s slowdown has already been more severe than anticipated. Reduced production and weak non-mineral activity are expected to drag growth this year, with only a gradual recovery projected from 2026. Inflation, currently low, is expected to rise toward late 2025 as the pula’s depreciation feeds into consumer prices.
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