GABORONE, — Botswana is considering higher personal and corporate income taxes as lawmakers scramble to close a widening fiscal gap caused by a prolonged downturn in global diamond demand, according to budget reporting and government-linked briefings this week.
Finance Minister Ndaba Gaolathe projected a 26.35 billion pula deficit (about 8.9% of GDP) for the coming fiscal year, with debt pressures expected to rise further if revenue weakness persists. Officials have framed the tax debate as a difficult but necessary step to avoid deeper cuts that could damage public services and recovery momentum.
The pressure point is diamonds. Botswana’s economy and treasury remain heavily tied to the sector, and state-backed producer Debswana has already cut output amid weak prices and sluggish demand. Stockpiles reportedly climbed to around 12 million carats by late 2025, highlighting how quickly sales bottlenecks have translated into fiscal stress.
Government and industry messaging now acknowledges that a rapid return to previous boom conditions is unlikely. In response, Gaborone is pursuing a dual-track strategy: short-term revenue stabilization (including tax options) and longer-term diversification into non-diamond mining and broader non-mineral tax capacity.
That diversification push is already visible. Authorities have announced plans to scale mineral exploration beyond diamonds and improve geological data through a new state-led exploration effort, with an eye on critical minerals and new investment partnerships.
Still, the policy trade-off is politically sensitive. Higher income and corporate taxes could support fiscal sustainability, but they also risk raising costs for households and firms at a time when growth is still fragile after recent contractions.
So the core question in Botswana’s debate is no longer whether adjustment is needed—it is how to sequence it: how much near-term pain to accept through taxation, how much to absorb through borrowing, and how quickly diversification can reduce structural dependence on diamonds. If reforms are paced well, Botswana can preserve macro stability while reshaping its revenue base. If not, the country may face repeated budget stress each time the diamond cycle turns down
