S&P revises outlook for Botswana, says diamond industry is rebounding

Sept 17 Reuters - Ratings agency S&P on Friday revised its outlook for Botswana to'stable' and '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 to rebound in 2021 by 8.5% in real terms because the diamond industry is rebounding from 2020's large pandemic-induced contraction, S&P said: Dispute.spglobal com ratings en regulatory article view type HTML code 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.

In the first half of 2021, the recovery in demand for diamonds, particularly 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.

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 on the BBB A - 2' rating saying stable and predictable institutional framework continues to support its ratings, and monetary policy framework supports macroeconomic stability.