COULD CBE BE ANSWER TO CIVIL SERVANTS’ SALARIES?

MBABANE – Could the Central bank of Eswatini be the answer to civil servants getting their salaries at the end of the month?
Amid the cash flow challenges faced by the country, the bank is ready to emerge as a redeemer.

This is if the statement made by Governor Majozi Sithole, to the effect that the bank will not refuse to dig from the reserves to bail out government is anything to go by.

The CBE, according to the governor, holds the reserves on government’s behalf.
He said if need be, the bank would release the money to the Ministry of Finance.

deposits

Last year in September, government received advance financing totalling E1.2 billion from the Central Bank.  Reserves are a country’s ‘external assets’- including foreign currency deposits and bonds held by central banks and monetary authorities, and gold. Foreign exchange reserves are the foreign currencies held by a country’s central bank.

They are also called foreign currency reserves or foreign reserves. The most important reason why bank’s hold reserves is to manage their currencies’ values.

However, Sithole was quick to mention that there is a limit of the amount of money that could be released by the bank to government.

obligations

“We can’t keep the reserves while government is struggling to honour its obligations; so, if approached, the bank will release the money.”
He said there is a clear mandate of the bank to adhere to its monetary policy, while the Minister of Finance Martin Dlamini is responsible for the fiscal policy.

He said the bank and the Ministry of Finance advised each other accordingly and upon advice given by each party, action is taken. Sithole said the challenges faced by government are known to the bank.

“We regularly report to the ministry the country’s monetary status and the cash flow committee addresses such continuously.”
He said keeping the reserves while government was struggling would be against economic development because entities like the Swaziland Revenue Authority (SRA) were also struggling to collect revenue from suppliers owed by government.

guarding

The impact of the debt by government has been attested to by an article published by the Swazi News last weekend where it asserted that Big Man Security Services had failed to pay its 80 personnel guarding health institutions in the country for four months.

This, according to the General Manager of Research and Statistics, Sikhumbuzo Dlamini, had a ripple effect, which affected the economy. This, he said, was in the failure by those who are employed to pay the ‘Pay as you earn’ which is collected by the SRA.

Dlamini said this also affected the suppliers which were big companies as it stalled growth. He said when failing to get their money from government, the companies could not expand as they lacked capital.

“The unintended effects of the accumulating arrears by government affect domestic tax as government fails to collect it. Some of the suppliers make a huge contribution and they can’t engage in any projects while being owed by government.’’

He said this affected the investments in the country as reported in the budget speech. Also, the general manager of Research and Statistics said when government was in arrears, the investment results were realised later than envisaged.

The governor said while delivering his budget speech, Dlamini acknowledged that the country was in arrears with its suppliers. He said he was of the view that government had a plan to pay out all the suppliers during this financial year.

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