Botswana has been pursuing both fiscal sustainability and diversification to address the structural vulnerabilities stemming from its heavy reliance on diamond revenues. Diamonds contribute approximately 80% of the nation’s export earnings, nearly one-third of fiscal revenues. While these revenues have underpinned Botswana’s historical economic success, such dependence amplifies fiscal risks, particularly in global market fluctuations. The government also derives significant income from the Southern African Customs Union (SACU), the world’s longest-standing customs union. Revenue-sharing from SACU’s Common Revenue Pool (CRP)—comprising customs duties, excise taxes, and development allocations—contributes 30–40% of annual government income (SACU Fact Sheet). However, reliance on these two revenue streams raises questions about the state’s medium-to-long-term fiscal resilience. To mitigate such risks, Botswana has initiated efforts to diversify its economy by promoting tourism, agriculture, and technology. Nevertheless, the pace of diversification remains insufficient to offset the potential volatility in diamond and SACU revenues. Economic policy reforms geared towards strengthening non-resource sectors and enhancing domestic revenue mobilization are imperative to reduce the country’s fiscal vulnerabilities and ensure sustainable growth (IMF, 2023).
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