Botswana’s external debt doubles to P60bn
Botswana's gross external debt has surged to P60.2 billion in 2025, representing 22.4 per cent of GDP, driven by increased government external borrowing amid reduced diamond revenues and high private sector intercompany loans, this according to the Bank of Botswana's External Sector Statistics Bulletin June 2026.
The debt level marks a significant increase from P33.3 billion (12.4 per cent of GDP) recorded in 2021, representing a near doubling of the country's external obligations over four years.
'The increase in external debt over the review period was largely driven by the private sector, which accounted for a greater share of total external borrowing, reflecting stronger private sector participation in international financing,' the Bank of Botswana stated in the Bulletin.
'Intercompany lending constituted a significant proportion of the private sector external debt, consistent with the practice within multinational businesses,' the report added.
Government external borrowing increased substantially between 2021 and 2024, partly reflecting fiscal pressures associated with declining revenues, particularly from diamond exports.
The weakening performance of the diamond sector, amid subdued global demand for natural diamonds, adversely affected fiscal revenues.
'Overall, the rise in external debt reflected the prevailing economic conditions, which have led to financing needs across both the public and private sectors to support the fiscal requirements for development projects and struggling business operations,' the Bank of Botswana noted.
Diamonds continued to dominate goods exports, accounting for 72.5 per cent of total merchandise exports in 2025. However, the sector faced significant challenges in 2024, characterised by weaker global demand for diamonds, high inventories and falling prices.
The decline in diamond revenues has also impacted foreign exchange reserves, which declined from P63.7 billion in 2023 to P48.1 billion (18.4 per cent of GDP) in 2024, before moderating further to P47.4 billion (17.6 per cent of GDP) by the end of 2025.
'The downward trajectory primarily reflects the sustained contraction in diamond export receipts amid persistent challenges in the global diamond market,' the Bank of Botswana reported.
Nevertheless, receipts from the Southern African Customs Union (SACU) continued to provide support, partially offsetting foreign exchange outflows. As at end-2025, foreign exchange reserves were equivalent to 6.2 months of import cover for goods and services.
The mining sector remained Botswana's largest recipient of FDI, with its share rising from 37.5 per cent in 2023 to 48.8 per cent in 2024 as FDI stock increased from P32.8 billion to P47.8 billion.
Foreign investment inflows had been on a steady upward trajectory from 2020 to 2023, reaching a peak of P11.1 billion in 2023.
'This increase was largely underpinned by substantial FDI inflows of P10.1 billion, reflecting increased intercompany loans, reinvested earnings, and new equity investment by foreign-owned businesses operating in Botswana,' the bulletin stated.
However, preliminary estimates for 2025 indicate that Botswana recorded negative investment inflows of P6.5 billion.
'This development was mainly attributable to the P8.8 billion decline in foreign direct investment, which reflected repayment of intercompany loans by local enterprises to their foreign parent companies,' the Bank of Botswana explained.
Despite the increase in external debt, Botswana maintained a positive net international investment position throughout 2020 to 2025. However, the gap between external assets and liabilities narrowed significantly.
The NIIP fell from P82.9 billion in 2021 to P52.7 billion in 2025. Foreign assets grew by 30.7 per cent from P151.8 billion to an estimated P198.4 billion, while foreign liabilities increased sharply by 67.4 per cent from P87.1 billion to an estimated P145.8 billion.
'The increase reflected higher intercompany lending, particularly in the mining sector, which accounts for a significant share of foreign direct investment,' the Bank of Botswana stated.
'Growth in other investment liabilities was driven by increased Government borrowing amid reduced diamond export earnings, which continued to weigh on fiscal revenues.'
The United Kingdom solidified its position as the leading source of FDI, accounting for 56.9 per cent of the country's total FDI stock in 2024, up from 54.7 per cent in 2023. The value of UK investments increased from P47.7 billion to P55.8 billion.
A significant development was the emergence of China and Hong Kong as notable investors, accounting for 5.7 per cent of total FDI stock, valued at P5.6 billion, strongly focused on copper mining.
'The rise of China/Hong Kong coincided with the exit of Australia and Canada from the top ranks, signalling a shift in global mining investment dynamics,' the Bank of Botswana observed.
The non-mining current account remained in persistent deficit throughout the period from 2020 to 2025, standing at P48.3 billion (19.7 per cent of GDP) in 2025.
'These sustained deficits reflect underlying structural pressures within the non-mining sector, with dependence on imports and continued net outflows in services and primary income,' the Bank of Botswana noted.
'Their persistence suggests that, outside the mining industry, the economy remains reliant on capital inflows such as foreign investment and external borrowing,' the report added.
Despite the challenges, the current account improved significantly in 2025, resulting in a substantial surplus of P7.9 billion (3 per cent of GDP).
'The surplus largely reflected higher export volumes associated with improved consumer demand for larger, higher-quality, and premium natural diamonds,' the Bank of Botswana reported.
In 2025, Botswana's main export destinations were the United Arab Emirates (28.2 per cent), Belgium (17.3 per cent), India (16 per cent), South Africa (10.3 per cent), China (8.4 per cent), and Australia (7.9 per cent).
Notable changes in export flows from 2024 to 2025 included an increase in exports to Belgium from P4.7 billion to P10.9 billion (131.9 per cent); the United Arab Emirates from P12.3 billion to P17.8 billion (44.7 per cent), and India from P6 billion to P10.4 billion (73.3 per cent).
South Africa continued to dominate Botswana's import market, accounting for 62 per cent of imports, followed by Namibia at 7.2 per cent and China at 6.6 per cent.
Between 2024 and 2025, imports from Namibia fell from P13.4 billion to P6 billion (55. 1 per cent). 'This significant reduction was due to the decline in diamond demand by P7.3 billion (79 per cent),' the Bank of Botswana noted.
The Bank of Botswana noted that the statistics are compiled in accordance with the Balance of Payments and International Investment Position Manual Sixth Edition (BPM 6) of the International Monetary Fund.