Botswana’s Finance Ministry has proposed raising both corporate and personal income taxes to counter a slump in diamond earnings and a widening budget deficit, Bloomberg reported. Company tax would increase by 2.5 percentage points to 24.5 percent, while the top personal income tax rate would rise by the same margin to 27.5 percent.

Budget data released by the ministry indicate that the shortfall could reach 8.9 percent of gross domestic product, more than double the 4 percent ceiling set in the country’s fiscal guidelines. Finance Minister Ndaba Gaolathe said in a Monday budget speech that taxation is “a collective investment in our shared development” and not a form of punishment. He added that all citizens have a responsibility to contribute to funding public services effectively.

Botswana’s diamond industry, historically the world’s largest by value, has seen demand weaken since 2023, largely due to the proliferation of synthetic gems. Unpolished diamonds previously provided around a third of the national budget and accounted for the majority of the country’s foreign-currency earnings.

Debswana Diamond Co., the country’s largest miner, has responded to the market downturn by cutting output and reducing costs. Chief Executive Officer Andrew Maatla Motsomi told Bloomberg that the market is expected to remain tight through 2026, with possible improvement only in the latter half of 2027.

The finance minister also said mineral income is forecast to contribute about 16 percent of total budget revenue in the coming fiscal year, while non-mineral income taxes and value added tax are projected to provide 45 percent of expected revenue. He added that the proposed tax bills will be debated during the current parliamentary session.