IMF Cautions Botswana on Expanding De Beers Stake as Diamond Demand Slumps
The International Monetary Fund (IMF) has advised the Botswana government against increasing its ownership stake in De Beers, warning that the move could exacerbate the country’s fiscal pressures amid ongoing economic challenges and heavy reliance on the diamond sector.
In a review of Botswana’s fiscal position published on December 8, the IMF highlighted heightened uncertainty stemming from the prolonged downturn in the global diamond market. The institution noted that these conditions pose significant risks to Botswana’s economic outlook.
“This risk is compounded by the fact that the government has expressed interest in increasing its 15% participation in De Beers,” the IMF said in its annual Article IV consultation report, which is prepared by IMF staff following in-country economic assessments.
The report further stated that IMF staff cautioned Botswana’s authorities against expanding their stake in De Beers, given the country’s constrained fiscal position and its already substantial dependence on diamond revenues.
Anglo American is currently in the process of divesting its 85% shareholding in De Beers. Botswana has publicly stated its intention to increase its ownership from 15% to a controlling stake. Angola and Namibia have also expressed interest in participating in a potential transaction.
According to the IMF, Botswana is at a “critical juncture,” facing both weak global demand for natural diamonds and an urgent need to diversify its sources of economic growth.
The Fund expects economic activity to continue contracting this year, reflecting further declines in diamond production as well as subdued performance in non-mining sectors.
“The decline in demand for natural diamonds has been sharper—and is expected to be more persistent—than anticipated,” the IMF said. “This has contributed to a sharp economic contraction in 2024, persistently high unemployment, particularly among young people, and significant widening of fiscal and current account deficits.”
IMF staff concluded discussions with Botswana’s authorities on September 26 and finalized the report on November 4. The IMF’s executive board reviewed the findings on November 19, after which the institution released the report along with related supporting documents.
