Botswana’s finance minister sought parliamentary approval on Wednesday to raise the country’s statutory debt ceiling from 40% to 60% of gross domestic product, as a prolonged downturn in the global market for diamonds has pressured public finances.

Ndaba Gaolathe said the proposal was aimed at giving the government flexibility during periods of economic stress, such as the one it is going through now.

The diamond market downturn has hit the southern African country hard, with two successive economic contractions in 2024 and 2025. Botswana had been viewed as an economic success story, partly because of its low public debt.

Raising the debt ceiling “does not imply immediate borrowing up to that level but rather establishes prudent headroom,” Gaolathe told lawmakers.

In last month’s budget, he said Botswana was expected to breach a debt-to-GDP ratio of 40% in the fiscal year that starts in April.

Late last year International Monetary Fund staff recommended raising the debt ceiling to 50% of GDP to give fiscal space to respond to economic shocks.

S&P Global this month downgraded Botswana’s sovereign ratings, saying diamond market weakness would weigh on its economy for longer than expected.

Diamonds typically account for about a third of Botswana’s national revenue and 75% of its foreign-exchange earnings.

Source: Mining.com