Botswana will employ some of its $8.5 billion in foreign exchange reserves to stimulate its economy after a fall in diamond prices hit growth in the world's second-biggest producer, President Ian Khama said.
Botswana in September cut its 2015 growth forecast to 2.6 percent from 4.9 percent and said it would record a budget deficit this year and next.
Diamonds account for around 75 percent of Botswana's foreign exchange earnings and 30 percent of GDP, but gem demand has slowed since late 2014. The value of rough diamond exports from Botswana's mines fell 15 percent in the first six months of the year.
"We have realized our economy is going to stagnate," Khama said in a televised speech. "The time has come for us to make bold decisions and implement these new projects that will boost our economy. But that doesn’t mean we are going to be reckless," Khama added, without giving details on the size of the extra spending. The economic stimulus, which Khama said would be ready in "a few weeks", will target tourism development, agricultural production, construction and manufacturing.