That challenges affecting the diamond industry worldwide seem to be having a particularly debilitating impact on diamond producing countries, the economies of which are heavily reliant on the gemstone.

The finance ministry of Botswana recently released a 2016-2017 Budget Strategy Paper (BSP) which scaled down the economic growth rate for this year to 2.6 per cent and a anticipated a budgetary deficit of  P 4.03 billion or 2.6 percent of GDP. Earlier, in February,  Finance Minister Kenneth Matambo had announced an estimated  growth rate of 4.9 per cent for the year with a  budget  surplus of P 1.23 billion or 0.8 percent of GDP.

Media reports suggest that the budget deficit has been also impacted “by an increase in government expenditure for the year due to public sector salary adjustments as well as cost associated with drought relief measures”.

However, the main impact on the economy has come from the decrease in diamond demand and a dampened market sentiment.

It is reported that there has been a fall of 20% fall in Debswana’s sales  of rough diamonds in the first half of the year.

The BSP posits a higher growth rate of 4.9 per cent for 2016. “However, the downside to these projections continues to be the country’s high dependence on diamonds, whose demand and prices are subject to global fluctuations,” the BSP  stated.