The International Monetary Fund has suggested that the Swaziland government, already facing protests from its citizens, may have to slash the government payroll by U.S. $35 million.
In a statement issued this week after an IMF delegation visited Mbabane, the fund said the country faced "a severe fiscal crisis". It said, as well as cutting the salary bill, the government should immediately implement an early-retirement scheme to reduce the size of the civil service.
The Times of Swaziland reported separately Friday that "impeccable sources from within the civil service" had told the newspaper that the IMF had warned that if its recommendations were not followed, the government would have to implement cuts totalling 30 percent of the salary bill.
The paper said earlier indications were that the highest pay cuts would amount to 10 percent for those earning more than 300,000 emalangeni (U.S. $43,700) a year.
The newspaper added: "The IMF said the 30 percent cut may soon be the only option available to the country, should it continue missing the benchmarks outlined in the Fiscal Adjustment Roadmap (FAR), which government proposed and the IMF endorsed."
The IMF delegation, headed by Joannes Mongardini, met the Swazi cabinet on Tuesday at the end of a two-week visit. It also met King Mswati III and, according to the Times, with the Swazi unions which have been leading anti-government protests.
The IMF statement said the central government's deficit has reached 14.3 percent of gross domestic product for the year ended March 31 - a consequence of plunging revenues from the Southern Africa Customs Union, a 4.5 percent unbudgeted wage increase for government workers last year and "large expenditure overruns goods and services, notably on defense, and, to a less extent, on capital projects". It added that consumer price inflation was projected to rise to about 8 percent in 2011.
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The IMF said it supported government plans to resume a privatization programme, beginning with privatizing the Swazi Bank and selling a new mobile phone licence.
The Times reported its source as saying: "The delegation recommended that government sell its shares in various companies in the country to raise money. They recommended that we sell our shares in companies like the SRIC (Swaziland Royal Insurance Corporation) and the sugar companies in Mhlume and Simunye, to mention a few."
Agence France-Presse reports that government needs IMF sanction to borrow cash from the World Bank and the African Development Bank to help navigate its way through the crisis.
