Botswana has announced a 2.76% devaluation of its national currency, the pula, as part of a revised monetary strategy to soften the blow of the ongoing global downturn in diamond demand, a senior finance official confirmed Thursday.
The country, which operates a flexible exchange rate regime reviewed biannually, links the pula to a currency basket that includes the South African rand. The new adjustment—up from the 1.51% devaluation set in December 2024—is intended to boost the competitiveness of local products and curb rising demand for foreign currency.
Despite being regarded as one of Africa’s most stable economies, Botswana’s GDP contracted by 3% in 2024 due to a sharp decline in diamond exports, which form the backbone of its economy. Further contraction is expected in 2025.
Said Tsimono, a Ministry of Finance official, said that dwindling foreign currency reserves have placed the country’s exchange rate framework under pressure. Reserves now cover just five months of imports, down from more than ten months previously, according to a June report by BMI Research.
President Duma Boko approved the currency devaluation, signaling the government’s commitment to sustaining macroeconomic stability. Analysts believe that while challenges persist, Botswana remains in a stronger position compared to regional peers such as Nigeria and Angola, which have faced severe foreign currency shortages in recent years.
