Botswana Credit Rating Cut to BBB- by S&P Global as Diamond Market Struggles Persist
On Friday, S&P Global Ratings downgraded Botswana’s long-term foreign and local currency sovereign credit ratings to “BBB-” from “BBB”, citing structural weaknesses in the global diamond market that are expected to weigh on the country’s minerals-dependent economy for longer than previously anticipated
The ratings agency also lowered Botswana’s short-term foreign and local currency sovereign credit ratings to “A-3” from “A-2” and maintained a negative outlook.
The downgrade reflects mounting pressure on Botswana, the world’s second-largest producer of natural rough diamonds.
The diamond sector, historically accounting for about 70% of exports and one-third of government revenue, now faces unprecedented challenges from synthetic diamonds and weak demand from China.
“Barring a significant policy adjustment or a strong recovery in global diamond demand, we project Botswana will post sizable fiscal deficits through 2029, putting further pressure on debt metrics,” S&P said in a statement.
Lab-grown diamonds have captured 20% of the global market by value and up to 50% by volume in the US engagement ring segment, while natural diamond sales face headwinds from weak Chinese demand, US tariffs, shifting consumer preferences toward gold jewelry, and reduced luxury spending.
Lab-Grown Diamonds Disrupt Botswana’s Industry
Debswana, Botswana’s main diamond mining company, has responded by cutting production at some mines in 2025 and temporarily closing others.
The downturn since the second half of 2023 led to a 27% reduction in production, from 17.9 million carats in 2024 to 15.1 million carats in 2025.
The company expects to maintain production at 15 million carats in 2026, roughly 40% below 2023 levels, with only modest increases projected for 2027 and 2028.
S&P forecasts Botswana’s economy to grow just 2.5% in 2026, following contractions of 2.8% in 2024 and 0.4% in 2025.
The fiscal deficit is expected to reach 8.9% of GDP in 2026/27, only a slight improvement from 9.3% the previous year.
