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Botswana seeks AfDB/World Bank funds - Khama

Botswana seeks AfDB/World Bank funds - Khama
Written by Bate Felix
Wednesday, June 03, 2009 4:19:21 PM

BRUSSELS (Reuters) - Botswana, the world's biggest diamond producer, will seek World Bank and African Development Bank funds to help ease the impact of the economic crisis, President Seretse Khama Ian Khama said in Brussels on Tuesday.

The Southern African nation, whose economy depends on the precious stones, has seen its revenues wiped-out as the economic downturn erodes demand for diamonds, prompting the suspension and closure of some mines.

"We are having to approach the African Development Bank and the World Bank to help us to ease that burden that we have encountered," President Khama told a news conference in Brussels after a meeting with European Union officials.

President Khama did not specify how much and what kind of aid his government will be seeking from the international financial institutions, or, if not already filed, when the request would be made.

Debswana, a 50/50 joint venture between the government of Botswana and De Beers, in February decided to shut diamond operations until April and suspended production at two mines for the rest of the year.

Khama said his government had decided to incur a large deficit in order to prop up the economy and keep job losses to a minimum while trying to stimulate the economy, which is dependent on government spending.

"We do have foreign exchange reserves that we can also dip into, but of course the more we erode those, the more our credit worthiness comes into question," Khama said.

Ratings agency Moody's in March cut the outlook for Botswana's foreign currency rating to stable from positive, and warned that a possible sharp rise in public debt and lower revenue due to a prolonged downturn in diamond demand could put the country's credit ratings at risk for downgrade.

Labels: AfDB, BOTSWANA, IAN KHAMA

posted by MrK @ 3:23 PM