AfDB quashes R800m in aid for Swaziland
Thursday, 31 May 2012
The African Development Bank (AfDB) would not be providing R800 million in budgetary assistance to Swaziland because the government had failed to meet its own promises of financial reform, Swazi Finance Minister Majozi Sithole said at the weekend.
"When we met with the AfDB, they said that Swaziland was good for $100m (R833m) a year for the next three years. But they stated that in order to give us the money they would require a letter of comfort from the International Monetary Fund (IMF)," Sithole told the media.
"We went to the IMF because AfDB required that letter of comfort. The IMF, before giving us that letter, wanted us to go through a staff monitoring programme," Sithole said.
An IMF team of advisers departed Swaziland this month, terminating their advisory assistance to the country because they concluded that the government was not serious about implementing fiscal reforms or rethinking spending priorities.
The AfDB’s withdrawal of its budgetary support grant to the cash-strapped country is the first consequence of the IMF’s withdrawal.
Although using IMF advice, Swaziland’s government has written its own fiscal adjustment programme, which calls for a reduced public service wage bill of R300m.
However, Sithole distanced himself from his own government’s policy goals.
"Some of the targets were a bit radical for Swaziland in that we were expected to cut salaries," he said.
Despite the country’s moribund economy and decades-long stagnation in gross domestic product growth and foreign investment, Swaziland maintains Africa’s largest government workforce per capita.
Sithole said IMF monitors had wanted assurances that any financial assistance given to the government to pay for early retirement benefits for retrenched civil servants would be met by a guarantee that the government would not create new civil service posts that would mitigate any retrenchment savings.
He did not say why the government would not issue such a guarantee.
Sithole said government retrenchments were unwise because Swaziland’s high unemployment rate would be exacerbated by an influx of former government workers, even if they were to be given retrenchment packages.
"If you add those employed people into the unemployed population, what activity are they going to be doing?" Sithole said.
He did not say why the government felt it had to provide guarantees to government workers that they succeed in post-government work.
Swaziland’s ability to service its debt bill this year and meet its public sector wage bill depends on continued revenue from the Southern African Customs Union (Sacu).
However, Raniero Leto, the head of operations for the EU delegation to Swaziland, said the money to meet government needs this year would probably not be repeated next year.
"This year Sacu receipts will reach R7.1 billion, far above their usual levels. While this Sacu windfall is a welcome relief, we should not lose sight of the fact that receipts for next year may be significantly less and may again plunge Swaziland into a fiscal crisis," said Leto, who was speaking during a Common Market for Eastern and Southern Africa workshop in Ezulwini this week.
Leto would not say by how much Sacu receipts were likely to diminish next year, but he felt it was possible there would be a return to the R2.9bn received by Swaziland last year. - Independent Foreign Service