GABORONE – Botswana now expects a much smaller budget deficit this fiscal year thanks to higher-than-expected revenue from the central bank and measures to contain spending, Finance Minister Ndaba Gaolathe said on Tuesday.

Gaolathe told an investment conference that the projected deficit for the 12 months to the end of March 2027 was P9.26-billion, or 3.1% of gross domestic product (GDP).

That compares with a deficit of P26.35-billion, or 8.9% of GDP, forecast in his February budget speech.

The improvement partly reflects an R8.1-billion upward revision to revenue, driven by a larger-than-expected transfer to government coffers from the Bank of Botswana.

"The final fiscal position will also depend on our ability to contain expenditure. That improvement is encouraging. It does not remove the structural fiscal pressures we still have to address," Gaolathe said.

Botswana's economy, long viewed as an African success story, has been hit hard by a prolonged downturn in the global diamond market, driven by economic uncertainty and the rising popularity of lab-grown stones.

Diamonds typically account for about one-third of Botswana's national revenue and three-quarters of its foreign exchange earnings.

The Southern African country's government is hoping for an economic rebound this year after two successive years of contraction. The economy grew 3.5% year-on-year in the first quarter of 2026.