Botswana’s public finances have delivered an important early sign of improvement, as the government recorded a P2.51 billion budget surplus by June 2026, equivalent to 0.85 percent of the Gross Domestic Product.
Vice President and Minister of Finance Ndaba Gaolathe revealed this on Tuesday as he addressed the Finance and Investment Pitso and Investor Roadshow 2026 in Gaborone.
As the government managed to collect more money than what it has spent thus far, Gaolathe, however, warned that “the improvement is encouraging. It, however, does not remove the structural fiscal pressures we still have to address.”
The significance of the surplus becomes clearer against the fiscal position Botswana entered 2026/27 with. The February Budget projected a P26.35 billion deficit, or 8.9 percent of GDP. Government has now sharply reduced that projection to P9.26 billion, or 3.1 percent of GDP, partly driven by an additional P8.1 billion in expectedrevenue, including stronger-than-anticipated revenue from the Bank of Botswana.
Although it is a substantial improvement, it also reminds Botswana that it cannot rely on one-off revenue gains to repair its finances. Government is therefore pursuing expenditure restraint, stronger tax administration and broader domestic revenue mobilisation.
Gaolathe told the Pitso that “changes to VAT and Income Tax are collectively estimated to generate an additional P2.47 billion in annual revenue.”
The fiscal improvement comes as the economy itself begins to recover. After contracting by 2.8 percent in 2024 and 0.7 percent in 2025, GDP expanded 3.5 percent year on year in the first quarter of 2026, according to Statistics Botswana.
The fiscal improvement comes as the economy itself begins to recover. After contracting by 2.8 percent in 2024 and 0.7 percent in 2025, GDP expanded 3.5 percent year on year in the first quarter of 2026, according to Statistics Botswana.
But the recovery remains vulnerable because diamonds still dominate Botswana’s economic fortunes. The African Development Bank has warned that the downturn in global diamond demand has weakened growth, fiscal balances and external buffers, reinforcing the need for diversification and stronger domestic resource mobilisation. That vulnerability is reflected in Botswana’s credit standing. S&P Global Ratings recently affirmed the country’s BBB-/A-3 investment-grade rating, but retained a negative outlook, citing continued pressure from weak diamond demand and strained fiscal and external buffers.
The Government further intends to develop the domestic bond market, with Parliament increasing the Government Bond Issuance Programme ceiling from P55 billion to P85 billion. The Minister stressed that the ceiling is not a borrowing target, but greater flexibility to finance development while maintaining debt discipline.
The bigger issue, however, is what Botswana does with capital once it is mobilised.
“Capital will move where confidence gives it reason to move. Our work is to earn that confidence and turn it into productive investment in Botswana,” he said.
