E2.1BN SACU BOOST FOR ESWATINI

MBABANE – Government coffers are expected to get a boost by the end of the week as about E2.1 billion is expected from the Southern African Customs Union (SACU) receipts. 

This was confirmed by the Minister of Finance, Neal Rijkenberg, in a brief interview yesterday. 

This is the final tranche of the 2020/2021 SACU receipts that government receives every quarter as part of its share from the SACU pool. 

The money comes at a time when government has a lot on its plate to cover, including civil servants salaries, government arrears and of late, the expected acquisition of COVID-19 vaccines budgeted for at about E200 million. 

This is apart from other recurrent expenditure such as the procurement of drugs and preparations for the reopening of schools.

During his Mid-Year Budget Review Report, which the minister presented in Parliament, he said the SACU receipts remained an essential, though very unstable source of revenue. 

Rijkenberg said at half-year of the 2020/21 financial year, the country had received E4.1 billion from SACU compared to the E3.16 billion in 2019/20. 

He stated that this had reflected a 32 per cent increase in SACU receipts which had been expected this year when compared to last year. 

“This source of revenue continues to prove volatile and there is little control to manage it,” Rijkenberg warned. 

However, the minister said to achieve higher growth rates in the SACU revenue source, some short-term measures were recommended. 

He said these had included reducing the age restriction of second-hand motor vehicles from outside SACU and minimising as far as possible the importation of petroleum products from outside SACU. 

The minister, however, stated that the second round effects of the pandemic came with anticipated declines in SACU revenues and the commencement of loan repayment obligations would put a strain on the fiscal position and stifle economic activity. 

It has been a trend that though sometimes substantial, a bulk of the SACU revenue normally is allocated to the payment of civil servants’ salaries. 

Freeze

In the Mid-Year Budget report, Rijkenberg had stated that despite the hiring freeze initiated in previous years, the wage bill had continued to grow year-on-year. 

He said personnel costs for the 2021/21 fiscal year were budgeted at E8.42 billion which had grown by approximately three per cent compared to 2019/20 attributed to the notch increases and cost-of-living adjustment awarded to civil servants. 

On the future outlook, the minister said in 2022/23, total revenue was expected to equate to E18.2 billion, implying a decrease of four per cent. 

“The significant decrease in expected revenue collection is caused by considerably lower SACU receipts,” he said. 

Rijkenberg stated that the weak economic performance in the 2020/21 fiscal year caused by the COVID-19 pandemic had an effect on SACU receipts in 2022/23, since the receipts were determined by the performance of the economies of the SACU member states, predominantly South Africa with a two year lag. 

In 2023/24, the minister said total revenue was projected to reach E20.1 billion representing an increase of 10.5 per cent. 

He said the increase would be driven by a rebound in SACU receipts and increased domestic revenue collection, in particular, individual income tax and VAT.  

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