JAMES HALL MBABANE – The International Monetary Fund fretted this week about Swaziland’s serious economic trouble if it doesn’t find a substitute for grants from the South African Customs Union that currently keep the country afloat. Some 66% of government revenues come from SACU receipts, up from 49% five years ago. Considered by some economists to be a “gift” from South Africa, these grants pay for the running of government. No substitute for these revenues is on the horizon. Swaziland has been unable to attract foreign investment to replace the multinational companies that set up shop in the country in the 1980s to escape sanctions imposed on South Africa, but then returned to SA in the ‘90s when the sanctions were lifted. Double-digit growth rates from those decades have dwindled to less than 2% growth per annum this decade, ensuring a diminishing standard of living for Swazis. “Over that same period, rising government expenditure, especially on the wage bill, has undermined fiscal sustainability and reduced foreign reserves to critically low levels. Poverty has escalated in the face of high and rising unemployment, food shortages, and the world’s highest HIV prevalence rate,” the IMF team reported. The IMF urged “a wide range of reforms to accelerate growth and make progress towards poverty reduction,” and found that the key policy challenges facing the Swazi authorities were to restore fiscal sustainability and external competitiveness. The IMF also recommended “improved effectiveness of government operations through reorientation of expenditure to priority sectors,” and, critically, structural reforms to improve the investment climate and increase Swaziland’s global competitiveness.
