A mission of the International Monetary Fund (IMF) led by Mr. Jiro Honda visited the Kingdom of Swaziland during January 13‒21, 2014. The mission discussed macroeconomic developments, the preliminary fiscal framework for 2014/15, and the authorities' policy priorities, setting the stage for the upcoming 2014 Article IV consultation (scheduled for mid-2014). The mission met with the Prime Minister, Hon. Sibusiso Dlamini; Minister of Finance, Hon. Martin Dlamini; Minister of Economic Planning and Development, Hon. Prince Hlangusemphi; the Governor of the Central Bank of Swaziland, Mr. Majozi Sithole; other senior government officials, as well representatives of the private sector and development partners. The mission would like to express its gratitude to the authorities and their staffs for the highly professional, productive, and open discussions.
At the end of the mission, Mr. Honda issued the following statement:
"Swaziland's economic performance has improved since the fiscal crisis of 2010‒11, which followed a significant reduction in revenues from the Southern African Customs Union (SACU). Following a decline in 2011, economic activity is estimated to have grown more than two percent in 2013. Inflation, after peaking at 9 percent in late 2012, has declined to 4½ percent in November 2013. Largely owing to higher SACU revenues in the last two years, fiscal and external balances have also improved. For the first time since 2006/07, the country recorded a fiscal surplus in 2012/13, though fiscal deficit of 2 percent of GDP is expected for 2013/14. International reserves exceeded four months of imports by end-2013.
"Swaziland's challenges, however, remain significant. Economic growth has been weak, compared with other countries at the same income level and in the region. Furthermore, there are risks to Swaziland's economic prospects, in particular the uncertain global and regional economic outlook that could lower SACU revenues.
"In light of these challenges and the need to safeguard the exchange rate peg, the mission welcomes the authorities' intentions to implement prudent fiscal policy for 2014/15 (with a fiscal deficit less than 1½ percent of GDP), while protecting spending for critical social and development needs. Such a prudent fiscal policy stance would help to build a sufficient international reserve buffer to better prepare for potential external shocks. The mission also welcomes further efforts to: improve public financial management; enhance tax administration; strengthen financial sector supervision and regulation; and promote private sector development."