According to the IMF, the budget deficit is expected to grow to 6% from 3.45% due to declining mineral revenues.
The IMF encouraged the diamond-rich southern African nation to consider delaying new infrastructure projects to bolster the economy.
“The continued economic slowdown is primarily due to a decrease in diamond production,” the IMF stated in a statement issued late on Friday.
“The IMF noted that some fiscal flexibility is justified this year due to the decline in mineral revenues, but emphasised that the implementation of the ambitious capital budget should be slowed to mitigate the worsening deficit and prioritise projects with the greatest returns.”
Decreased consumer demand and global economic weakness have diminished the demand outlook for diamonds, which are typically viewed as luxury goods.
Earlier this year, Finance Minister Peggy Serame forecasted a 4.2% economic growth.
However, a few months later, the central bank warned that this goal may not be achievable due to ongoing difficulties in the global diamond market. Botswana receives 30-40% of its revenue and 75% of its foreign exchange earnings from diamond sales.