24 February 2013

Swaziland: Budget - No Reason for Optimism

"It is a bold budget that will boost growth and support the vulnerable ... the financial system in Swaziland is generally sound ... We remain cautiously optimistic," Swaziland's Minister of Finance Majozi Sithole said in his budget speech on Friday (22 February 2013), writes Kenowrthy News Media.

Others have less reason for optimism. "Swaziland is tied with Somalia as having the worst performing economy in Africa and there is nothing on the horizon to improve the situation," a Swazi investment counsellor told Business Report in January. Swaziland's inflation rate, for instance, is worse than Zimbabwe's.

"We have witnessed consequential events as we went through the tough fiscal or economic crisis, scholarships being withdrawn, students under the free education program being chased away from schools, a threatened cutting of the wages bill, the cutting into half of elderly grants. In the year 2012, the economy of Swaziland visibly became political," Swaziland Economic Justice Network said in a press statement on Thursday.

Majozi Sithole, for his part, blamed "the strength of the global economy" for Swaziland's woes, whilst admitting that Swaziland's "own economic growth rate remains sluggish and significantly below our potential." He named slow growth abroad, fewer tourists, reduced government spending, high inflation and a freeze in public sector wages as other reasons.

But Joannes Mongardini, Mission Chief at International Monetary Fund, disagrees with Sithole. After having visited Swaziland in November 2012, he said that "growth in Swaziland has been weaker over the last ten years than in other SACU countries.

This is associated with high unemployment, widespread poverty, rising inequalities, and the highest HIV/AIDS prevalence rate in the world." This is echoed by the 2013 Index of Economic Freedom, where one can read that the "poor management of public finance has aggravated [Swaziland's] fiscal crisis since 2011."

The solutions given by Majozi Sithole to his targets of creating jobs, improving the value for money of public spending, and strengthening social sector spending, amongst other things, rather bizarrely included a combination of cutting both public spending and taxes, including corporate taxes.

On the other hand, Sithole made no mention of reducing the money lavishly spent on king Mswati III, who is believed to be one of the wealthiest monarchs in the world, despite two thirds of his countrymen living below the poverty line.

Nor did he announce any cuts on Mswati's prestige projects, instead stating that "[one of] the largest projects in 2013/2014 will be Sikhuphe International Airport," a white elephant that the IMF as far back as 2004 said threatened "to crowd out budgetary resources for meeting the country's urgent social needs and to weaken sentiment among donors."

And political and social reforms of Msawti's absolute monarchy was not mentioned either, even though a new IMF report clearly links growth in Swaziland to reforms. "Swaziland would need to secure a broad political and social consensus on reforms and make continued progress on strengthening the quality of its institutions."

Instead increased funding of the police and the army, who have been increasingly brutal in their clamp down on Swaziland's democratic movement, was on the agenda. "Crime is a deterrent for foreign direct investment, particularly violent crime," said Sithole.

"The Police, the Army and the Correctional Services must be recognised for their efforts to make Swaziland a safe place to live and invest. To ensure that these critical institutions are properly resourced, the Budget will provide an additional recurrent allocation of E175 million to the Ministry of Defence, the Police and the Correctional Services."

- Kenworthy News Media

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