The Botswana government is set to receive a US$ 1.5 Billion loan from the African Development Bank (AfDB). According to Bloomberg this money will be used to fill part of the budget deficit for the year 2009/2010, said an e-mail statement from the Tunisia based bank .
The U.S $ 1.5 billion loan is the biggest loan to be given by the bank. It is also Botswana’s first loan from the bank since it was established 17 years ago, said Donald Kaberuka the president of the African Development Bank.He also noted that “the case of Botswana illustrates the impact that the financial crisis is having on even the best managed economies in Africa”.Botswana’s economy is expected to slow down to about 2.6 percent this year from 3.9% in 2008.
Botswana is a role model for other African countries due to its proper economic management and good governance. The global economic downturn has adversely affected this nation which is the worlds largest diamond producer.The effect was due to the falling prices of diamonds and other commodities. The current budget deficit is about 13.5% of the Gross Domestic Product (GDP).
Botswana’s diamond production fell 3.6% to 32.6 million carats in 2008.
Botswana is home to about 1.9 million people, that rely on diamonds (directly or indirectly) for most of their income.
Over 50% of the government revenue of Botswana comes from the Debswana Diamond Co. which is also half owned by the government. The remaining 50% is owned by the De Beers Group. The Debswana mines were shut for about 2 months this year due to the fall in diamond prices triggered by the global economic downturn.