IMF’S ESWATINI GROWTH FORECAST LOWEST IN SACU

MBABANE – Global lender International Monetary Fund’s revised growth forecast for Eswatini paints a somewhat gloomy picture for the country as compared to its SACU counterparts.

SACU is the Southern African Customs Union (SACU) consisting of five countries of Southern Africa. These are Botswana, Eswatini, Lesotho, Namibia and South Africa. Its aim is to maintain the free interchange of goods between member countries.

After an initial forecast predicting a fall across countries, IMF has since released a revised forecast for the global economy. Initially, Eswatini was expected to endure a less fall in the SACU region (about three per cent).

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The revised figures released on January 26, 2021 now tell a completely different story about Eswatini. IMF has a projected a 1.4 per cent growth for the country, which is the lowest in the five-member countries. The highest figures are for Botswana (8.7 per cent), with Lesotho, Namibia and South Africa’s projections at 3.9, 3.4 and 2.8 per cent, respectively.

Generally, IMF has become more upbeat about the global economy, as coronavirus vaccinations are administered across the world. It is, however, worried about the risk of  new COVID-19 variants posed to the post-pandemic recovery.

Notably, IMF’s growth forecast for the country is almost half of that made by government. Two days ago Minister of Economic Planning and Development Dr Tambo Gina, reported that an economic rebound was expected this year, but at a slower rate than previously reported. According to government, Gross Domestic Product (GDP) is forecasted at 2.7 per cent in 2021 compared to a previous projection of 4.5 per cent.

According to its latest World Economic Outlook, the institution now expects the global economy to grow 5.5 per cent this year — a 0.3 percentage point increase from October’s forecasts. It sees global GDP expanding by 4.2 per cent in 2022.

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Despite highlighting that these were just projections, an economist who spoke condition of anonymity, told this publication that the effects of slower economic growth included less tax revenue than was expected to spend on public services; increased government borrowing; and possible unemployment, if growth is insufficient to create new jobs displaced by technology, among others. 

Meanwhile, in a previous consultation with the country last year, IMF executive directors noted that Eswatini was at a critical juncture, with subdued growth, rising public debt, and depleting international reserves.

The directors recommended a credible medium‑term fiscal adjustment plan to achieve debt sustainability and macroeconomic stability. They also emphasised the need for additional high quality adjustment measures, while supporting long-term growth and protecting the most vulnerable through better‑targeted social programmes. Specifically, they encouraged the authorities to contain public wage spending and administrative expenses, rationalise transfers to state‑owned entities, prioritise capital projects, and broaden the tax base.

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