S&P Global Ratings has affirmed Botswana’s sovereign credit rating at 'BBB+' long-term and 'A-2' short-term, keeping the country in investment-grade territory.
However, the global ratings agency revised Botswana’s economic outlook from stable to negative, citing concerns over weak global diamond demand and declining export revenues.
The revised outlook signals potential economic headwinds, with Botswana’s fiscal position under pressure. S&P warned that low diamond prices and sluggish global demand could continue to constrain government revenues, delaying planned fiscal consolidation efforts and efforts to rebuild economic buffers.
Despite the outlook downgrade, S&P acknowledged Botswana’s strong institutional framework, particularly highlighting the smooth political transition following the country’s October 2024 general elections. The government’s commitment to reducing unemployment, diversifying the economy, and increasing social support while maintaining fiscal discipline also contributed positively to the rating assessment.
A key factor expected to bolster Botswana’s economy is the recently concluded deal with De Beers, which extends diamond mining rights until 2054. The agreement is anticipated to generate long-term benefits for the country, reinforcing its economic stability.
In addition to mining, investment in non-mining sectors, including transport, ICT, tourism, agriculture, and power generation, is expected to play a role in economic growth. S&P noted that economic diversification efforts would be crucial in sustaining fiscal health in the long run.
S&P suggested that an upgrade in Botswana’s outlook could occur if global diamond demand rebounds, leading to stronger fiscal revenues and external flows. Additionally, further economic diversification and tax base expansion could support long-term stability.