Brian Benza
2 July 2009
Botswana's trade deficit has started to ease-off as diamond sales pick-up on the back of renewed hopes of an economic recovery.
The Central Statistics Office has reported that for the first time since October 2008, Botswana recorded a trade deficit of less than P1 billion in April. The April figure stands at P204.3 million. Total exports were valued at P2 billion during April 2009, having increased by 26.9 percent from P1.5 billion recorded in March.
The increase in total exports were largely attributed to higher diamond sales of P1.5 billion from P823.4 million in March as confidence starts to come back to the market that has been ravished by the global economic recession.
Botswana registered a P2.6 billion trade deficit in 2008 as imports outweighed exports due to a heavy slump in diamond sales in the last quarter of the year. Although the Minister of Finance and Development Planning Baledzi Gaolathe announced that diamond revenues are going to plunge by about 50 percent this year, there has been some recovery in sales in the past few months.
"But there is optimism that the recovery of the market has begun and there are indications that prices could be firming as well and hopefully we will get back to our normal average sales of around $300 million a month," said Blackie Marole, managing director of Botswana diamond mining giant, Debswana.
Although exports are beginning to firm, in April, total exports declined by 21.2 percent compared to P2.5 billion recorded during the same month last year.
Of P2 billion earned in exports in April this year, diamonds contributed 72.4 percent (P1, 5 billion) followed by copper nickel with 10.6 percent.
Textiles contributed 4.5 percent (P89.6 million) while meat and meat products accounted for 3.6 percent (P72.4 million). Although the increase in exports contributed largely to the fall in the trade deficit, the decrease in the import bill in the same month also played a part.
The CSO reports that in April 2009, total imports were valued at P2.2 billion having decreased by 16.1 percent from the March 2009 figure of P2.6 billion. Comparison of total imports value for April 2009 to the value recorded during the same month in 2008 shows a decrease of 16.9 percent (P449 million), from P2.7 million to P2.2 million. On the other hand, comparison of March 2009 imports value to the value recorded during the same month of the previous year shows an increase of 5.1 percent (P127.3 million) from P2.5 million to P2.6 million.
Global demand for rough diamonds, which are the mainstay of the Botswana economy, is expected to drop by some 60 percent this year.
The government has already estimated that revenues will be cut by over 50 percent.
Botswana is disadvantaged by the fact that it is a net importer of goods, particularly fuel and food and it is economically dependent on mineral exports, especially diamonds. That means its growth prospects are largely built around investment in minerals.
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