14 May 2014

Swaziland: Minister Misleads Over IMF Support

Swaziland's Minister of Finance Martin Dlamini misled the people of the kingdom and the global community when he claimed the International Monetary Fund (IMF) had given Swaziland an 'almost clean bill of health' on its economy.

He was reacting in local media to the latest IMF statement following its recent 'mission' visit to Swaziland.

In fact, the IMF statement issued on 12 May 2014 said the opposite. It said Swaziland's challenges were 'significant'.

It said in particular that, 'the economy has suffered from weak growth performance, which adversely affects social developments. Furthermore, there are risks to Swaziland's economic prospects, in particular the uncertain global and regional economic outlook that could lower SACU [Southern Africa Customs Union] revenues.'

It went on say that Swaziland should make reforms to its public sector, by which it meant reduce the amount of money spent on public servants' salaries.

'To help implement the prudent fiscal policy, the mission also encourages the authorities to enhance efforts for public sector reforms and public financial management reforms, while welcoming further efforts to enhance tax administration,' it said.

It also said Swaziland had 'weak growth performance', adding, 'This weak performance has been largely associated with low private sector development (depressed private investment in particular).'

It concluded, 'In this light, the [IMF] mission encourages the authorities to proceed with wide-ranging structural reforms, including further improving business climate, facilitating financial intermediation, and pursuing land management reforms.'

This is not the first time the Swaziland Government has misled the public about its relationship to the IMF.

In 2013, the then Finance Minister Majozi Sithole was untruthful when he said the kingdom's economy had recovered. He said at the time, 'I can safely say the economy is now under control. We have survived the worst economic challenges ever.'

But, the IMF had never said such a thing. Instead, in February 2013 it 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.'

There are many similarities between the 2013 IMF report and the one published this month, including poor economic prospects, underfunding of social care projects and the need to reduce spending on public service spending.

The Swazi Government has a long history of being untruthful about the IMF and what it says about Swaziland.

In 2011, the Prime Minister Barnabas Dlamini called a press conference to announce that the IMF was about to issue a 'letter of comfort' that would express its confidence in the Swazi economy and allow the Government to seek loans from international organisations such as the Africa Development Bank. But, no letter existed and since that date, the IMF has never given its support to Swaziland's economic policies.

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