ESWATINI’S SACU SHARE COULD DROP AGAIN

MBABANE – Eswatini’s major source of revenue, SACU, which dropped by 18 per cent from E7.1billion in 2017/18 to E5.8 billion in 2018/19, is set to decline even further.

This could be as a result of the South African Government’s push for a bigger slice of the revenue generated by the Southern African Customs Union (SACU), as reported by Business Day yesterday.

SACU member states are Eswatini, South Africa, Botswana, Lesotho and Namibia.
Should this move by the South African Government come to fruition, it will further exert pressure on the local reserves which fell to 2.8 months in June 2018. Gross official reserves amounted to E6.5 billion at the end of August 2018, reflecting a month-on-month decline of 10.5 per cent.

The Central Bank of Eswatini (CBE) on Monday explained that at this level, the reserves were equivalent to an import cover of 3.0 months, lower than the 3.3 months observed in July 2018.

It should also be mentioned that cash flow challenges in the kingdom continue to persist leading to the accumulation of expenditure arrears which stood at E3.7 billion in mid-July 2018.

Restructuring the revenue-sharing formula which sees the lion’s share of revenue going to SACU member states including Eswatini was believed to release badly needed funds by South Africa to meet the country’s dire fiscal challenges.
The publication reported that the Ministers of Finance Nhlanhla Nene and Trade and Industry Rob Davies on Tuesday said they wanted parliament’s support to push for a change in the revenue-sharing formula and to resist attempts to fundamentally restructure the tariff-setting mechanism.

Nene and Davies reportedly briefed parliament’s finance and trade & industry committees where it was resolved to support their stance and to submit their decision to the National Assembly for endorsement.
This move was viewed to strengthen the position of SA’s negotiators during the talks.

 “A review which will see us being put on a better footing will be very difficult to arrive at,” Nene was quoted to have said.

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