21 February 2013

Swaziland: IMF Confirms Economy in Trouble

Information just released by the International Monetary Fund (IMF) confirms that Swaziland's Finance Minister Majozi Sithole lied when he said the kingdom's economy had recovered.

Last month (January 2013), Sithole said that receipts of E12.2 billion (US$1.1 billion) due this year to Swaziland, mostly from the Southern African Customs Union (SACU), meant, 'I can safely say the economy is now under control. We have survived the worst economic challenges ever.'

Then, earlier this month, the Times of Swaziland newspaper falsely reported in a headline, 'Financial crisis in Swaziland is over - IMF'. It said, 'It is now official; Swaziland is out of the financial crisis it had plunged into since 2010, the IMF has declared.'

The paper then allowed Sithole to say, 'We have no problems with their assessment that we are out of the crisis.'

But, it was not true. The IMF had never said such a thing. Now, this week, the IMF published one of its regular assessments of the state of Swaziland's economy, based on information gathered after a visit to the kingdom.

The IMF reported the Swaziland economy 'will be unsustainable over the medium term and subject to significant downside risks'. It said there needed to be 'upfront expenditure cuts, including on the wage bill'.

The IMF said that in the recent past the government had repaid some of its debt but this was 'partly achieved through cuts in education, health, and other poverty-alleviating spending'.

To underline the fragile state of the economy, the IMF said, 'Swaziland's economic prospects remain difficult and that, without credible and comprehensive fiscal adjustment and structural reforms, the current fiscal and external position will be unsustainable over the medium term and subject to significant downside risks.'

Sithole has yet to respond publicly to the news.

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