IMF BACKS BIGWIGS PAY CUT

MBABANE – The International Monetary Fund (IMF) has given a green light to pay cuts for big earners.

Geremia Palomba, Deputy Division Chief of the African Department of the IMF, said the country’s wage bill had ballooned in recent years such that it exceeded that of largest economies in the world.

Palomba said the country’s wage bill, which is about E850 million per annum, was five per cent higher than for most developed countries. “Locally, the wage bill is 15 per cent of the gross domestic product (GDP) while developed countries had their wage bill at 10 per cent of their GDP,” Palomba explained. He said this was caused by the increment in the amount spent on salaries in the country which had increased rapidly in recent years. Worth noting, amid cries from a variety of social commentators in the kingdom in 2016, politicians and the judiciary had an increment of 32 per cent while civil servants had 18 to 25 per cent increments.

Noting that his organisation gave advice to government on overall issues, without nitpicking, Palomba said it was essential for government to review the pay structure holistically if it was to come out from the current dire fiscal challenges.  “The government may review its pay structure and adjust it to make it relevant to its GDP,” he said.

Palomba noted that the fiscal challenges that the country was currently embroiled in had been caused by a number of factors, including that Southern African Customs Union (SACU) receipts declined while revenue generated in the country also declined. However, while this was happening, salaries went up.
He said the increment in wages caused the financial problems the country was currently enduring. He translated this to mean that capital spending was growing very fast in the country such that 70 per cent of government’s spending went into wages.

debts

Palomba said this current fiscal challenge was parallel to that of 2011. However, he was also quick to note that this current financial predicament also had the factor of the drought and accumulation of debts.

Currently, the total public debt is said to be at E13.8 billion, an equivalent of 22.3 per cent of GDP at the end of October 2018.  The Central Bank of Eswatini (CBE) reported that this reflected an increase of 1.5 per cent from the revised figure of E13.6 billion recorded in September 2018.

Meanwhile, political commentators have, in recent months, emphasised the need for the country to prioritise its spending. This was also emphasised by His Majesty King Mswati III when opening the last session of the 10th Parliament. The monarch said the country should budget and spend what it had. This is a stance which seems to have been adopted by some of the incoming ministers as some of them noted that they were ready for pay cuts.

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