ESWATINI ECONOMY VULNERABLE – MOODY’S

MANZINI – Eswatini’s over reliance on SACU makes it the most vulnerable economy within the region, says Moody’s, a giant international credit ratings agency.

Latest ratings have placed the country at B2 negative, which downgrades the country, creating a not-so-favourable picture for credit investment.  Namibia is at Ba1 negative, while Botswana is at A2 stable. South Africa is at Baa3, which is medium-grade and indicates that the neighbouring State is subject to moderate credit risk.

Moody’s investor service report issued in February states that Eswatini is most exposed to the impact of only modest growth in the revenue of the Southern African Customs Union (SACU).

“Among the four Moody’s-rated sovereigns in the SACU, Eswatini’s fiscal profile is most vulnerable, given its dependence on SACU revenue as well as its more limited institutional capacity and policy effectiveness,” said the credit risk rating agency.

An economist said: “Eswatini still has a clean status when it comes to loan repayment, However, this can change for the worst if credit ratings such as those by Moody’s are ignored. If the public debt is over 14 billion, then surely there is a time when we will fail to make repayment. We need to fix our current account status,” said the expert.

Funded

He said the country should not have half its budget funded by SACU because receipts are declining every year. He also said the solution was to empower the Eswatini Revenue Authority to improve tax collection rate.

Meanwhile, Eswatini’s national development strategy, which expires in 2022, prioritises increases in infrastructure, agriculture production, and economic diversification, while aiming to reduce poverty and government spending.

Minister of Finance Neal Rijkenberg  said there was need to exercise caution as the country continued to acquire more debt through domestic borrowing and external financing for government projects. He said this required a strong evaluation of the feasibility prior to implementation.
Meanwhile, when delivering his Speech from the Throne, His Majesty the King said the fact that Moody’s now rates Eswatini’s economy meant the country had made a breakthrough towards extending its visibility in the international financial markets.

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