The African Development Bank has approved a $304 million loan to Botswana to address mounting fiscal challenges and support economic reforms as the country grapples with declining diamond revenues.
The funding, sanctioned by the Bank’s board of directors on 14 May, is expected to finance the Governance and Economic Resilience Support Programme (GERSP), a one-year general budget support operation covering the 2025/26 fiscal year.
AfDB deputy director general for southern Africa, Moono Mupotola said the “operation comes at a critical time for Botswana” when the country is facing fiscal strain.
“We will work with the new administration to implement reforms that will deepen fiscal sustainability, strengthen transparency, and create a more business-friendly environment for economic diversification.”
Botswana, long dependent on diamond exports, is facing financial strain after weak global demand led to a 1.7 percent economic contraction in 2024.
The country’s fiscal deficit widened from a balanced budget in 2022/23 to 4.7 percent of GDP in the 2023/24 financial year, with projections showing a further increase to 6.7 percent this year.
The GERSP initiative would focus on two key areas – strengthening fiscal sustainability and transparency and stimulating economic growth.
Measures would include boosting domestic revenue mobilization, curbing illicit financial flows and improving public expenditure efficiency.
The programme would also support small and medium-sized enterprises, particularly those led by women and youth, to drive job creation and reduce inequality.
AfDB director of governance and economic reforms, Abdoulaye Coulibaly noted that the loan is a short-term budget relief measure intended to stabilise Botswana’s financial position while engaging with the new government, elected in November 2024, on long-term economic development goals.
“The African Development Bank is committed to supporting Botswana’s ambitious socioeconomic development agenda through credible and transformational reforms, project and programme financing, and continuous policy dialogue,” Coulibaly said.
AfDB has been a consistent partner in Botswana’s economic strategy, previously funding the Economic Recovery Support Programme in 2021-2022.
JN/APA