UPDATE 1-S&P revises Botswana's outlook to 'stable' on strong diamond sector recovery

Reuters
·1 min read

(Adds background on diamond sales, economic forecast)

Sept 17 (Reuters) - Ratings agency S&P on Friday revised its outlook on Botswana to 'stable' from 'negative' saying an economic rebound, supported by a strong diamond sector recovery, will lead to an improvement in fiscal and external performance over the next two years.

"We expect Botswana's diamond export-dependent economy will rebound by 8.5% in real terms in 2021 because the diamond industry is rebounding from 2020's large pandemic-induced contraction," S&P said https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/2723490.

Last month, Botswana lifted its 2021 economic growth forecast to 9.7%, compared with the 8.8% forecast in February, due to higher diamond sales and a recent rebasing of GDP accounts.

The recovery in demand for diamonds, especially in China and the United States also helped fuel a 41% jump in the sales of rough diamonds by Debswana Diamond Company, a joint venture between the government and Anglo American's De Beers, in the first half of 2021.

S&P also noted that Botswana was making reasonable progress on vaccination, despite global supply constraints earlier this year, with its pace of vaccination comparing well with other sub-Saharan African countries.

The agency affirmed Botswana's ratings at 'BBB+/A-2', saying stable and predictable institutional framework continues to support its ratings, and monetary policy framework supports macroeconomic stability. (Reporting by Nishara Karuvalli Pathikkal in Bengaluru; Editing by Shailesh Kuber)