Gaborone: Botswana’s budget deficit for fiscal 2016 may be much wider than the projected 2.6 percent due to the slowdown in the diamond market, credit rating agency Moody’s said on August 27.

Earlier, Botswana’s Finance Ministry forecast a deficit of $393 million (4.03 billion pula), or 2.6 percent of its gross domestic product for the fiscal year. Diamonds account for almost 40 percent of Botswana’s budgetary revenue and around 85 percent of exports in dollar terms.

“We see risks for an even more pronounced deficit because of a prolonged downturn in world diamond demand specifically tied to China’s economic rebalancing and lower luxury spending,” the ratings agency said.

Moody’s also said that the lower diamond revenues will add to existing pressures on the government budget, including drought-relief expenditures and higher-than-budgeted outlays on public-sector wages.