Botswana: Moody’s Cuts Ratings, Outlook Negative.

Moody’s Ratings downgraded Botswana’s long-term domestic- and foreign-currency issuer ratings to Baa1 from A3, maintaining a negative outlook. The downgrade reflects challenges in adjusting to a structural downturn in the diamond industry, which accounts for about 30% of GDP and 90% of goods exports, leading to economic contraction, weaker external buffers, and rising debt. Since April 2025, the global diamond slump has persisted, and the sector remains difficult to replace as an engine of growth and foreign exchange earnings. Moody’s expects the government to gradually implement coordinated policies, with debt peaking around 40% of GDP, though external and domestic risks remain. With government financial assets nearly depleted, Botswana is increasingly vulnerable to higher interest rates and further debt pressures.