14 December 2025
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% 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% 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.
U.S tariffs to uncertainties
The IMF also noted that U.S. tariffs on Botswana’s diamond exports add to the uncertainty. Botswana faces a 15% tariff on rough diamonds shipped to the U.S., while countries that polish Botswana’s stones face an average 28% tariff, weighing heavily on demand and production projections.
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.”
Public debt could climb rapidly
Under the consultation’s baseline scenario, public debt could climb rapidly, approaching 60% 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.
Structural risks are also emerging. The IMF highlighted the rapid rise of lab-grown diamonds, which now account for more than 20% of global diamond jewellery sales. Retail prices for synthetic stones are up to 90% cheaper than natural diamonds, reshaping market dynamics, particularly among younger buyers.
Other concerns
Major producers expect natural diamond demand to recover only partially in the medium term, supported by marketing efforts distinguishing natural from lab-grown stones. But the pace is expected to be slow and uncertain.
Against this backdrop, the IMF urged Botswana to strengthen fiscal buffers, accelerate economic diversification, and avoid additional financial exposure to the diamond industry through expanded ownership in De Beers.
YourBotswana view…
We are no experts but we couldn’t help but shudder in fear at news of the government’s plan to take over De Beers. As if Botswana buying De beers wasn’t bad enough, Angola has also reportedly thrown its name in the hat.
Reports say as part of the buy out, Botswana would also take charge of the marketing of our diamonds. That would probably be the fastest route to cheapening a very high-value commodity, one that could use very highly experienced, steady and expert hands; NOT the Botswana government. For reference, look no further than the House of Botswana – “Rooted in Organic Luxury” brand that seems to have everyone in hysteria… and many other botched up ‘branding’ jobs.
For all its claims, Botswana knows nothing about classy PR/Communications and branding. There’s no easy way of putting it: Botswana would do well to listen to the IMF because this idea is a recipe for disaster, a train wreck waiting to happen. One that would end in tears for Botswana and Batswana.
Source: https://shorturl.at/1ilP1
