Johannesburg - South Africa denied reports on Tuesday that it had
approved a $1.2bn bailout loan for neighbouring Swaziland, which is Africa's
last absolute monarchy and mired in an acute cash flow crisis.
"While the South African government is in receipt of a loan
request from Swaziland, as confirmed last week, no loan has been agreed to or
granted to Swaziland," the Treasury said.
The Swaziland Communist Party (SCP), an underground movement
based mostly in South Africa, said this week it had received "credible reports"
that Pretoria had thrown a lifeline to King Mswati III, who is ploughing through
central bank reserves to keep his unelected government afloat.
The SCP declined to say how it had obtained the information.
Mswati, who has at least a dozen wives and an estimated
fortune of $200m, turned to Pretoria after the International Monetary Fund
(IMF) said he must do more to slim down Africa's most bloated bureaucracy if he
wanted any aid.
A collapsing Swaziland - a landlocked nation of 1.4 million
people - is not in the interests of South Africa, the continent's largest
economy, but helping Mswati is politically sensitive for the ANC.
It is inconceivable that the ANC, a self-proclaimed champion
of democracy in the region, would write a blank cheque to a country that has
served as a long-running diplomatic and political headache right on its
doorstep.
Trade union federation Cosatu, which loathes Mswati, and
opposition parties have made clear any assistance should only be granted in the
interests of regime change and restoring democracy.
Swaziland's chronic fiscal crisis - the IMF puts its budget
deficit at 14.3% of gross domestic product, similar to Greece - stems
from a sharp decline in receipts from a regional customs union that has
normally provided it with two-thirds of its revenue.
The budget crunch and prospect of a civil service overhaul has sparked rare protests against Mswati, whose security forces have responded with water cannon, rubber bullets and the arrest of prominent students and activists.
So far, the government has kept its head above water by eating into central bank reserves and running up at least $180m in unpaid bills, although there are doubts about its ability to pay public sector salaries in the next few weeks.