Gabarone, Botswana, MININGREVIEW.COM — 04 November 2008 – The global credit crunch has had little impact on Botswana’s financial system, which has been cushioned by the diamond-rich African nation’s foreign reserves.
In his first state of the nation address since taking over from former President Festus Mogae earlier this year, President Ian Khama told parliament he was confident international financial volatility would not lead to major changes in the government’s budget.
He pointed out that diamond production – the southern African nation is the world’s biggest producer – has sustained growth, providing jobs and a crucial source of foreign earnings for the government.
Khama warned, however, that the country must diversify its economy because of an expected drastic decline in the diamond sector in the next decade. He listed tourism and agriculture as two of the most attractive areas for investment.
“Our own financial sector remains strong and has not yet been much affected by the credit crunch,” he said. “Our foreign exchange reserves have also not been compromised, and can cushion any immediate impact on our balance of payments,” Khama added.
“Due to past savings, government spending can be sustained in the face of any short-term revenue downturn,” he concluded.
Reuters reports that with growth rates averaging at least 8% over the last two decades, Botswana has been Africa’s best performing economy and a model of political stability on the continent.