Diamond Market Malaise Could Lead to Bigger Budget Deficit in Botswana

Reuters reported that Moody’s believes that Botswana’s anticipated 2.6-percent budget deficit for the 2015/2016 financial year could turn out to be “much wider.” The firm sees the poor diamond market potentially having a negative impact on the country.
As quoted in the market news:

Diamonds account for almost 40% of Botswana’s budgetary revenue and around 85% of exports in dollar terms.
“We see risks for an even more pronounced deficit because of a prolonged downturn in world diamond demand specifically tied to China’s economic rebalancing and lower luxury spending,” Moody’s said.
A sustained weakness of the diamond market throughout the year has seen diamond prices softening while annual output targets have also been trimmed.
Last week, Botswana’s Finance Ministry forecast a deficit of 4.03-billion pula ($393-million), or 2.6% of its gross domestic product for the 2015/17 fiscal year.

Click here to read the full Reuters report.