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MBABANE – Hardly a month after IMF strongly warned against additional budget financing, the ‘broke’ Swazi Government has successfully sought an advance of E1.2 billion from Central Bank of Swaziland (CBS). 

CBS has reported that the advance increased domestic debt to E6.7 billion at the end of September 2017, an equivalent of 11.4 per cent of GDP.
It was stated that this figure showed that domestic debt increased by 6.2 per cent over the past month when compared to E6.4 billion that was recorded in August 2017.
“The increase is due to the new Central Bank advance extended to government coupled with an improved uptake of treasury bills,” said CBS.

Against this backdrop, CBS has most recently been strongly advised to refrain from additional budget financing by the International Monetary Fund (IMF).
This recommendation was contained in the Executive Board of the IMF after conclusion of the Article IV consultation with the kingdom. 
On September 1, 2017, IMF directors noted that strong fiscal adjustment would help release pressures on monetary policy.

They underscored that the CBS ought to refrain from additional budget financing and, in the context of the peg with the South African Rand; the CBS should maintain the policy rate at a positive spread with the South African Reserve Bank’s rate.
CBS Governor Majozi Sithole said the provision that speaks to additional budget financing was stipulated in legislation. He said the law clearly stated how the process and when government should pay back the money, to which the state fully complies to.

“Total removal of this process would require us to engage on the issue with government,” said Sithole.  Sithole said he was fully aware that other countries were implementing processes that would do away with additional budget financing but it would require extensive consultation prior to any considerations for implementation.

Overall, preliminary figures for the month ending September 30, 2017 indicated that total public debt stood at E12.2 billion, an equivalent of 20.9 per cent of GDP. This showed an increase of 4.2 per cent from E11.7 billion recorded at the end of August 2017.   

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