Africa

IMF: Swaziland on the verge of bankruptcy

By Simon Allison 18 November 2011

The International Monetary Fund has been visiting Swaziland over the last couple of weeks, conducting a regular annual check-up on the health of the economy. Its diagnosis makes grim reading: this patient might be terminal. By SIMON ALLISON.

“The fiscal crisis in Swaziland has reached a critical stage,” said Joannes Mongardini, head of the recently completed IMF mission to our impoverished neighbour, in a statement. He went on to list a litany of problems – all of them serious, most of them seemingly insurmountable. The government is spending more money than it collects. It has R1.5 billion of unpaid bills. These unpaid bills are forcing companies that depend on government spending to shut down or lay off workers. Growth has slowed to a trickle (0.3% is the IMF estimate).

And while the government is trying to deal with the issues through a supplementary budget that makes steep cuts, its not going far enough, and is cutting funding from the most vulnerable elements of society. “It is, however, the mission’s assessment that the supplementary budget is insufficient to align expenditures to available financing and that further cuts are needed, particularly on the wage bill,” said Mongardini. “The mission also urges the government to protect education, health, and pro-poor spending from further cuts or additional arrears, and to strengthen commitment controls to avoid further expenditure overruns.” The IMF criticised the Swazi government for failing to make a $10 million payment to Aids orphans.

Swaziland is yet to accept the R2.4 billion loan offered by South Africa. Although the Swazi government hasn’t gone into too much detail about why it is delaying, it’s thought that the conditions attached to the loan – specifically the ones that entail Swaziland’s absolute monarch giving up some power – are unpalatable to King Mswati III. However, some reports are emerging that the dire economic situation might force Mswati’s hand. The government, meanwhile, is reported to be taking loans from the reserves of the country’s banks, leaving them dangerously exposed, as well as from Mswati himself. DM



Read more:

  • The African King Canute: as revolution sweepts through Africa, how long can the continent’s most autocratic monarch survive? in the Daily Mail;
  • Swaziland’s bankrupt monarchy, by the numbers, on Yahoo News;
  • Swazi king puts high price on bailout: dissidents, on Reuters Africa.

Photo: REUTERS

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