Pretoria - Swaziland needs to implement
critical economic and financial reforms as part of conditions
for a R2.4bn bailout from South
Africa, Finance Minister Pravin Gordhan
said on Wednesday.
Gordhan said the first of three tranches of the loan would
be transferred in August when negotiations had been finalised
and that repayments would be via debits from Swaziland's share
of regional customs receipts.
The loan buys crucial time for King Mswati
III, whose unelected administration has been running through the central bank’s
reserves to pay public sector wages.
To the disappointment of the British-educated monarch’s opponents
inside and outside the impoverished state, the aid will not be tied to reforms
such as unbanning political parties or releasing Swaziland’s five prisoners of
“It’s not in our interest to have an economy in trouble that could
place a burden on the South African government,” Gordhan told reporters.
Pretoria hopes Mswati, who has at least a dozen wives and an
estimated personal fortune of $200 million, would “create space” for political
dialogue, Gordhan said, but added: “It’s not our place to dictate to them.”
Such comments could land him and President Jacob Zuma in political
trouble given the ill-feeling in South Africa towards Mswati, who has run the
landlocked nation of 1.4 million people as his personal fiefdom for more than
“We should not waste this opportunity to contribute to the
democratisation of our neighbour by using our economic leverage,” the
Democratic Alliance party said.
The Swaziland Solidarity Network, a dissident group based in South
Africa, described the loan as a “betrayal of the people”, while Cosatu said the aid should be used as a political
“It is not democratic, and people are suffering. South Africa
should impose conditions which will facilitate democracy and could lead to the
unbanning of political parties,” Cosatu President Sidumo Dlamini said.
Swaziland’s fiscal problems stem from a 2009 recession in South
Africa that triggered a collapse in revenues from the SACU regional customs
union that has historically accounted for two-thirds of Swaziland’s budget.
The government has kept its head above water by using central bank
reserves, which now stand at just over $500m, and running up at least
$180m in unpaid bills.
In the face of a Greece-style budget crisis, Mswati tried and
failed to get cash from the International Monetary Fund, which refused to hand
over anything without seeing major cuts to what is officially Africa’s most
“We are thankful, and also appreciate the assistance we have
received from South Africa,” Mswati was quoted as saying in the Times of
Swaziland newspaper. “This shows that they are good neighbours.”
The loan will buy him some time but will not resolve what the IMF
says is the crux of the country’s problem: a civil service wage bill that
consumes 18% of GDP.
“They needed a bridge loan like this to get them into next year
when the SACU revenues might look a bit better,” said Christie Viljoen of NKC
“But as long as they don’t cut their civil service staff, they’re
not going to get money from the likes of the IMF.”