Bloomberg reports that Botswana, where diamonds made up 65 percent of exports in 2008, has sold few gems since November, according to the government. From boasting one of Africa’s largest fiscal surpluses, the government now is racking up debt at a record pace as revenue plummets.

Debswana Diamond Co., a joint venture between Botswana’s government and South Africa’s De Beers, has closed four mines whose production equaled almost a third of the country’s gross domestic product. While three are set to reopen next week, they won’t earn much: the government expects diamond sales to fall by half and prices to drop by 20 percent this year.

Botswana isn’t without resources to fight the global financial crisis. The country has record foreign currency reserves of about $10 billion, while years of fiscal surplus mean local banks and foreign lenders will be able to finance deficit spending this year and next.
The open-pit Jwaneng mine in south-central Botswana is the richest in the world, producing 15.6 million carats in 2005. Debswana says it will reopen it and two others on April 15. A fourth mine, Damtshaa, and the Orapa No.2 processing plant will remain closed.

The reopening won’t prevent Botswana’s economy from contracting 5.2 percent in the year through June and 6.2 percent in the 12 months after that, according to Moody’s Investors Service. That follows five years with average growth of 4.4 percent.

Credit is given to Bloomsberg by DiamondTopics.com (Cached News)