The coronavirus pandemic in Swaziland (eSwatini) might lead to social unrest because the government is failing to support people living outside of large cities, the global financial analyst Moody's reported.
The coronavirus (COVID-19) pandemic came on top of an ongoing financial crisis in the kingdom that had left the government with large debts that it failed to stabilise, Moody's said in a report on Monday (20 July 2020).
Swazi Government revenue has fallen during the coronavirus crisis that began in March 2020 and the government's response mainly seeks to re-prioritize spending rather than increase total spending.
Moody's reported the government had failed to stabilize, let alone reverse, 'a prolonged increase in its debt burden'.
It added, 'Reforms are often stalled by the need to navigate eSwatini's complex political system, including the royal family, its advisers and the cabinet.' King Mswati III rules Swaziland as an absolute monarch and he appoints the Prime Minister and cabinet members.
Moody's reported that on 15 July 2020, a committee met to discuss the government's financial rating. The main points raised were that Swaziland's economic strength, had 'materially decreased', including its 'debt profile'.
On the general health of the Swazi economy, Moody's reported, 'eSwatini's economy has experienced several years of low growth, averaging just 1.9 percent over the past five years. After a significant contraction in 2020 output as a result of the coronavirus shock, Moody's expects eSwatini to return to this trend of relatively low growth over the foreseeable future.
'Containment measures to stem the spread of the coronavirus weigh on economic activity in 2020, while the economy is also affected by the disruptions to global supply chains, including in industries like textiles, forestry and transport.
'Beyond the impact of the coronavirus pandemic, growth remains constrained by a number of structural impediments related to the poor business environment for private investment. Prevailing poverty and income inequality also weigh on the economy's growth potential.
'Poverty and income inequality are pronounced because of low growth and job creation, with about 60 percent of the population living below the poverty line, while 38 percent live in extreme poverty.'
There was also high youth unemployment, it added.
Moody's said there were material social risks 'because of the large income inequality between royal family members and the general population. While there is a pro-democracy opposition group, media is tightly controlled and regulated.' Moody's regarded the coronavirus outbreak as a social risk because of its 'substantial implications for public health and safety'.
It added, 'The coronavirus pandemic may also cause social unrest as the government's capacity to provide support for those living outside of large cities is currently stretched.'
Separately, the Swaziland Central Statistical Office reported the kingdom was officially in recession following two quarters of negative growth. Gross domestic product declined by 6.5 percent in the first three months of 2020. This followed a decline of 1.2 percent in the fourth quarter of 2019.