Fin24

Swaziland fiscal crisis deepening - IMF

2011-08-31 14:58

Johannesburg - A fiscal crisis gripping Swaziland, Africa's last absolute monarchy, is deepening despite an emergency $370m loan from South Africa earlier this month, the International Monetary Fund (IMF) said on Wednesday.

After a visit by its representative to the landlocked nation, the IMF urged the government to make further cuts to what is officially the continent's most bloated democracy to try to balance its books.

However, it gave a candid assessment of reforms so far, saying the appointed administration of King Mswati III, who has at least a dozen wives and a personal fortune estimated at $200m, had missed several targets to cut a budget deficit of more than 14% of gross domestic product.

"The mission advised the government to pass a supplementary budget to cut expenditures, while preserving pro-poor spending, and strengthen expenditure controls in order to restore fiscal sustainability," it said in a statement.

The Washington-based institution, which has refused to lend money until Swaziland takes a hatchet to its massive public wage bill, also urged the government to pay back money borrowed in emergency from the central bank, lest it jeopardise a one-to-one currency peg with South Africa's rand.

"Preserving the parity with the South African rand is of utmost priority," the IMF said, adding that central bank reserves had dropped to $554m, or 2.2 months of import cover, as of August 26.

Three months' import cover is widely considered the minimum for a stable currency.

Swaziland's fiscal problems stem from a 2009 recession in South Africa which 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 and running up at least $180m in unpaid bills. Its efforts to cut public spending and raise taxes from a moribund economy have met with little success.

The budget crunch sparked unprecedented public protests against Mswati, who is accused of running the country of 1.4 million people as his personal fiefdom.

Dissident groups inside and outside the country - where political parties are banned - are hoping the cash crunch will force political change, although the South African loan has bought the government time. 

Comments
  • joe777xxx@24.com - 2011-08-31 15:16

    This "king" is out of controll with his spending,13 wives and each with her own palace? Only in black Africa........

  • Dmitri - 2011-08-31 15:26

    Why am I not surprised by this?

  • No8 - 2011-08-31 15:28

    And I read that King Mswati is demanding R400m commission for organising the loan from SA!!!

  • Peter - 2011-08-31 15:30

    Shall we chuck some more money down the Monarch's drain?

  • jan.v.vuuren - 2011-08-31 15:39

    lol

  • Francois - 2011-08-31 15:52

    I think it is time that Swaziland becomes the tenth province of SA, King Mswati gets 50% of the money wasted on Goodwill and let the people of Swaziland vote. The ANC will not like this as the Swazis can vote against them for support the despot, but actually we as the taxpayers of SA are paying for him and everyone else on the Swazi state's payroll.

  • GypseyAnn - 2011-08-31 15:59

    TOUGH! The king wants a load of commission for his own personal use. I say tell them to go to hell!

  • Mundu - 2011-08-31 16:10

    Maybe Mswati can sell his Mybach (sp?) car he bought for millions to help the situation. Also get some of his wives to go out and get a job!

  • Momus - 2011-08-31 17:20

    There will be a civil war in Swaziland..... Goodwill the King had is disappearing faster than the Ace of Spades at an ANCYL after-party. And that's not Goodwill the King as in Zwelitini...that's goodwill the Swazi's had for Mswati.

      Markusman - 2011-08-31 19:39

      the tool inherited a functioning kingdom with loyal subjects and robbed it blind. he deserves whats coming. its sad to see such a piece of tradition and history collapse because of one idiot.

  • gatvol4corru - 2011-08-31 18:23

    Kiss our tax-payer's money good-bye! Thanks Jacob! Bloody idiot!

  • Wishbone - 2011-08-31 21:10

    One person driving a country to ruin - so many African dictators so few leaders!

  • Wishbone - 2011-08-31 21:20

    One person driving a country to ruin - so many African dictators so few leaders!

  • Wishbone - 2011-08-31 21:22

    One person driving a country to ruin - so many African dictators so few leaders!

  • Rustique - 2011-09-01 07:50

    You mention "the continent's most bloated democracy" Unlikely to say the least ... doesn't anyone proof read reports any more?

  • chris.khanye - 2011-09-01 09:46

    South Africa can't throw money to resolve this problem. Even King Mswati who's rumoured to be worth $200m agrees with IMF. He won't throw his "own" dollars to solve this problem.

  • pages:
  • 1