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LOSING ON ALL ENDS

05/12/2018 07:05:00 By Thabiso Dlamini

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NOTHING seems to work about the Eswatini economy. All key economic indicators paint a bleak picture of the economy that makes us losers on all ends, despite all the institutions and brains in place to make our economy tick.

Take for example, according to the Central Bank of Eswatini (CBE) 2017/18 Integrated Annual Report, the country’s gross domestic product (GDP) is projected to fall by 0.4 per cent in this financial year.

Government is operating on a budget deficit of E4.5 billion, public debt has soared to E12.5 billion with more than 65 per cent of this debt accumulated in the domestic economy, our trade balance is also in the negative of E397.0 million, and worst of all the country’s reserves are also shrinking, hovering just on 3.2 months of the required three months to cover imports of goods and services. It is clear that our economy is coming undone, and this is very unfortunate because it is happening right in hands of the 20 or so government ministries, close to 50 parastatals, countless commissions, a fully housed Parliament, and a more than capable Cabinet. All these institutions, with their highly esteemed personnel, are a painful and unsustainable cost to the g-wallet. Yet in Eswatini it seems okay for things to just fall apart without any major shake-ups and accountability being pinned to all of these warm bodies in the different institutions that make what we call the Government of Eswatini.

It is no secret that at the centre of this economic landmine is our government, which consistently fails to manage the g-wallet to economic prosperity. The problem is that government accounts for 40 per cent of the economy and has developed intricate dependencies with many of the sectors of the economy. Having government as a major player in the economy is a huge threat to financial and economic stability because our government is quickly becoming synonymous with a huge cash-flow challenge, a non-starter!

As a result, the prevailing fiscal challenges are quickly decapitating what is left of the different sectors of the economy. For instance, Eswatini’s external reserves continue to fall because government has no choice but to make draw-downs on its deposits held at the CBE to cover the persistent cash shortfalls. Government depends on the volatile Southern African Customs Union receipts for a bulk of its revenue, while a large share of the household and small medium enterprises sector rely on government finances for income. When government makes a mess of public finances, the economy at large quickly turns into a mess that finds even the private sector struggling to operate viable business enterprises.

Fair enough, government has suspended some capital projects, and recently cut down on official government trips to manage the little that remains in the g-wallet. Yes, trips do take a sizeable share of public finances on a daily basis; however, there are other white elephants in the government system that must be wrestled to get rid of the non-starters that have weighed down our economy for quite a long time now. Government needs to come up with radical changes on how to tackle the issue of the ballooning public sector and huge wage bill, how it can consolidate the many government entities that require subventions out of the taxpayers’ pay cheques, and most importantly, commit to spending to create value for money out of every cent that government takes out of our pockets in the name of tax.

In other words, government should not shy away from tackling the real challenges that mar its system and the economy as a whole. If we continue to dance around the many white elephants, five years later, government and the economy will be in a deeper crisis. At the same time, the little savings that government will make must be injected back into the economy to create economic and social value that can see the Eswatini economy growing again. The country cannot be saving money and increasing taxes just so it can increase benefits to MPs, senior government officials, etc, as well as establish more commissions and parastatals that will have a huge claim on the already stretched list of taxes paid by individuals and businesses in this country.

EmaSwati are tired of losing, particularly losing the little bit of money that they struggle to make in this losing economy. The strategic roadmap to economic recovery to be released by the new government should not be the Economic Recovery Strategy (ERS) and Investor Roadmap of 2010/11, written in different words. Eswatini needs a new economic lifeline that will put us on a winning trajectory.