The document, presented by the Finance Ministry, estimated GDP growth of 4.2% in 2023.
The resource-rich country heavily relies on diamond mining, which accounts for a fifth of its GDP and more than two-thirds of its foreign exchange income.
But its over-dependence became its biggest vulnerability when the coronavirus crisis crashed diamond prices and demand, forcing the economy to shrink by 8.5% in 2020.
The prices have recovered now and ratings agency S&P last week revised its outlook to stable from negative, saying an economic rebound, supported by a strong diamond sector recovery, will lead to an improvement in fiscal and external performance over the next two years.
"Mining sector growth is anticipated to rebound to 33.9 percent in 2021, before moderating to 3.5 percent and 2.0 percent in 2022 and 2023, respectively," according to the strategy paper. The sector shrank by 26.5% in 2020.
However, despite the higher GDP projection, Botswana expects its budget deficit to widen to 4% of GDP in 2022 from 3.7% in 2021, the document showed, adding that deficit financing will push public debt to 26.8% of GDP in 2022 from 22.4% in 2021.
It also revised down its 2021 mineral revenue forecast to 20.2 billion pula ($1.81 billion) from 23.1 billion pula reflecting continued uncertainty in the global diamond industry.
"The fiscal impact of the crisis is anticipated to be felt over (at least) three fiscal years, resulting in cumulative revenue losses from the pandemic forecast to amount to around P25.0 billion (12.9 percent of GDP) between 2020-2023," the paper said.
($1 = 11.1857 pulas)
(Reporting by Brian Benza in GaboroneWriting by Promit Mukherjee, Editing by Angus MacSwan and Emelia Sithole-Matarise)
By Brian Benza
