• Conflict over water, coal

    SA's leaders have upped their support of the water-intensive coal industry, says Keith Schneider.

  • Cost of doing business

    The world can't afford the $4.7trn a year in environmental costs of business, says Mandi Smallhorne.

  • Voter paralysis

    With so much tilting voters against change, democratic reason is the loser, says Solly Moeng.

All data is delayed
See More

Swaziland fiscal crisis deepening - IMF

Aug 31 2011 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. 

imf  |  swaziland  |  bailout


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Debt is one of the biggest financial issues facing South Africans today. Find out how you can avoid and manage your debt with Fin24 and Debt Rescue.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The upcoming petrol price hike is:

Previous results · Suggest a vote