Govt debt rises to E1.7bn
EZULWINI - As if to pour cold water over the teachers’ demand for a 4.5 per cent cost of living adjustment the Central Bank has stated that government’s arrears have increased by at least 700 million.
This was revealed by Executive Assistant to the Governor, Bhadala Mamba yesterday during a breakfast meeting to brief Central Bank clients on the prevailing economic climate in the country. The meeting, initiated by Nedbank was held at the Royal Swazi Convention Centre.
Teachers are currently engaged in a strike action, which has since been joined the civil servants association and nurses, to force government to give them a 4.5 per cent cost of living adjustment.
Government arrears, according to Mamba had, for some time, been estimated at E1 billion but now stand at E1.7 billion. He said this was an estimated figure pending government audited reports.
Mamba said this means the arrears are escalating because government was not able to pay pension fund for civil servants.
"Our government is committed to solving this as a result; it is sitting with the pension fund. In all this the small and medium enterprises must be paid first," he said.
Mamba said the increase in arrears was a clear indication that government was not yet out of the woods. However he said Swaziland still has the window to borrow from international financial institutions.
"The country’s total debt is less than E4.5 billion which gives it more room to contract debt but the debt contracted must be used profitably in investments that would promote economic growth and development," he advised. He said even if South Africa’s E2.4 billion loan was successfully solicited, the country’s borrowing window could still be minimal.
He also pointed out that due to the unpredictability of the SACU receipts, the country might face more cash flow challenges because it might fall next year. Should the SACU receipts drop next, it is noted that the challenges could worsen as it means government would continue have escalating arrears.
The International Monetary Fund (IMF) having withdrawn its support to Swaziland this means the country is far from getting a letter of comfort, which would permit it to borrow from other international financial institutions. The African Development Bank has also declared that it would not grant any financial assistance to Swaziland after it failed to make reforms suggested by the IMF.
The bank hosted such a meeting for the second time as the first was last year. It brought together policymakers, bankers, academics, the business community and regulators to examine how economic and financial trends are playing out in Swaziland.
The increase of government areas will have serious repercussions on the already ailing economy. This means more money from E7 billion received from the Southern Africa Customs Union (SACU) will be largely utilised on paying the areas. Despite the fact that the receipts from SACU increased, it can be noted that it would not contribute to any economic development because that means government has to borrow more money ease its cash flow.
Economists had said government needed more money to at least bolster its economic status. Principal Secretary in the Ministry of Finance Khabonina Mabuza had been quoted several times as saying government still needs the E2.4 billion from South Africa.
However, SA had not yet released it into the country through the Central Bank of Swaziland. Government has said it would need E240 million for only teachers’ salary increments while the Prime Minister Sibusiso Dlamini has reiterated that salaries would not be increased at least for three years.
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