ESWATINI MAY SEEK E1BN FROM IMF, WORLD BANK

MANZINI – Government needs to approach the IMF and World Bank for a E1 billion loan as the economy goes into meltdown due to  the partial lockdown.
The IMF is the International Monetary Fund.

The Minister of Finance, Neal Rijkenberg, needs to approach IMF in order to deal with the wider domestic and global fallout from the Covid-19 pandemic. 
Rijkenberg has to present a carefully and thorough move set to deal with the fiscal implications of the partial lockdown that came at a time when his ministry was treading strategically in resuscitating an economy that had been on its knees for almost a decade.

With a mandate to harness an economic growth of five per cent per annum, the novel virus halted trade globally, setting Cabinet aback in its quest.
 In a mission to understand the implications brought about by the pandemic that has seen over 1 million cases confirmed in recent weeks, this publication sought the input of the minister on what options he had.

This was because some economists had proposed that Rijkenberg approach financial institutions and seek about E1 billion to fund the fight against the coronavirus and also sustain the economy during this period of fiscal turbulence.

To this, the minister acknowledged that the country was already engaging some of its financial partners in seeking assistance. He said some of the financiers that government was engaging with were the IMF, World Bank and the African Development Bank (AfDB).

Institutions

“We’ve approached the financial institutions seeking broad amounts, but nothing is final yet as Cabinet will meet on Easter Monday wherein we shall present our proposal as a ministry.”

The minister said the actual figure would be available after engagements with Cabinet. Rijkenberg explained that this was a route he would have not pursued given that it would send the country into more debt, which would be expensive to repay.
The debt ratio of the country is said to be over 34 per cent.

However, worth noting is that the need for financial assistance has grown drastically since the coronavirus was declared a pandemic.
The Senator Lizzie Nkosi-led Ministry of Health sought a supplementary budget of E100 million to combat the spread while, according to the minister, the National Disaster Management Agency (NDMA) presented a E230 million budget.

He said government gave E26 million to NDMA last week and would be offering another E30 million next week. In addition to that, to date, contributions made to the Eswatini Resource Mobilisation Committee, led by the Deputy Prime Minister (DPM) Themba Masuku, amount to over E24.7 million.

The money raised by the task team is for it to procure medical supplies, equipment and food according to the minister. According to the World Food Programme (WFP), the country faces numerous challenges including chronic food insecurity. It states that 63 per cent of people live below the national poverty line, which tallies about 159 000 people being food insecure.

Lockdown

On the other hand, when Rijkenberg was asked how the partial lockdown was affecting the National Budget, which he presented on Valentine’s Day – February 14, 2020, he said: “The partial lockdown and the lockdown in neighbouring South Africa are having a big negative impact on the budget. It is going to be worse if the partial lockdown is prolonged.”

Worth noting is that South Africa is on a full lockdown with only essential goods being allowed to be transported into the country.
Given this challenge, Rijkenberg said the major impact imposed by the partial lockdown in the country was that there was no major trade going on in the country, which would result in small and medium enterprises (SMEs) having to deplete their capital as there was no activity in the markets.

An economist concurred with the minister and said: “Look at it this way, if a second-hand clothing hawker is allowed to sell her clothes in town, she gets profit and uses part of that to get basic amenities while reserving a portion for stock. Now that they are home, they have no revenue getting into their coffers and they will end up spending their capital to sustain themselves. So when everything has calmed down, they will have no resources to buy stock.”

This, he said, was a major challenge as there was minimal cash flow which would result in the loss of capital,  sending the SMEs into a dungeon of poverty.
Meanwhile, African Finance Ministers met last month in a virtual conference to exchange ideas on the efforts of their respective governments in dealing with the social and economic impacts of COVID-19 and they agreed that financial relief was needed to deal with the virus.

They noted that even before the COVID-19 pandemic, Africa was already experiencing a huge financing gap in funding measures and programmes aimed at realising SDGs and Agenda 2063 targets and goals.

The ministers emphasised that without coordinated efforts, the COVID-19 pandemic would have major and adverse implications on African economies and the society at large. Original economic forecasts in most economies are on average, being downgraded by 2-3 percentage points for 2020 due to the pandemic.

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