28 August 2012

Swaziland Loan Talks Still Underway - Treasury

Photo: Nadia Neophytou
Anti-government protests in London (file photo): The Swazi government had approached the South African government to offer financial assistance to its fiscal crisis.

Pretoria — Negotiations into South Africa's possible R2.4 billion loan to Swaziland are on-going, says National Treasury.

On Monday, Treasury clarified Finance Minister Pravin Gordhan's response to a Parliamentary question on the negotiations of a loan to the one absolute monarch on the continent.

"The minister's response has been interpreted by some in the media to mean that South Africa will make the first payment to Swaziland next month (September). This is not true. Negotiations by financial authorities of the two countries are still underway," said Treasury.

The Swazi government had approached the South African government to offer financial assistance to its fiscal crisis that came about as a result of the decline in Southern African Customs Union (SACU) revenue of over 60%.

In his response to a Parliamentary question on the details of a possible loan, the minister said government approved the granting of financial assistance of R2.4 billion to the Government of the Kingdom of Swaziland in the form of a conditional loan from the South African Reserve Bank (SARB) to the Central Bank of Swaziland.

The government of South Africa will provide the SARB with the necessary guarantee to secure the loan.

Gordhan said the loan would be paid to the Swazi government in three equal trenches, subject to certain fiscal and related technical conditions being met. In the reply, the minister said the first tranche payment of R800 million was scheduled for payment in September 2012.

"The September 2012 reference in the minister's reply to the Parliamentary question was in terms of an intended payment schedule, which, as the minister's response makes clear, was subject to the conclusion of negotiations by financial authorities of the two countries," noted Treasury.

"The loan is governed by a Memorandum of Understanding that outlines a set of political, fiscal, collaborative and capacity-building measures that will be pursued by the respective parties.

"In addition, separate agreements will be signed by the respective Central Bank Governors (Loan Agreement) and the respective Ministers of Finance (Financial Conditions Agreement)," said the Parliamentary reply.

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