GOVT GETS SACU’S E2.9BN, CASH FLOW UNDER CONTROL

MBABANE – The government’s cash constraints are under control, as the country has received its E2.9 billion quarterly SACU receipts.

The Minister of Finance, Neal Rijkenberg, revealed that last week the country received its E2.9 billion quarterly payment of the Southern African Customs Union (SACU) receipts. This was during a press conference at his office in the Ministry of Finance, where he allayed fears that he said had engulfed emaSwati about government’s financial status.

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He said E1.4 billion of that money was used to repay the Central Bank of Eswatini. This is part of the E11.75 billion that was announced last year, which was the country’s share from SACU. He further said suppliers who were owed by government had started receiving their payments. He said a certain chunk of the SACU receipts were utilised to pay government suppliers. He said another E500 million was expected to come from the Johannesburg Stock Exchange (JSE), probably next month, which will be used to settle all government arrears.

The minister said there was nothing sinister about the outstanding payments of E700 million, more especially around this period when government would be expecting SACU receipts. He said most of the outstanding payments were not more than 60 days old, which was much better from where the country was in 2017.

Suppliers

Last year July, the ministry announced that government settled all its arrears with suppliers. “I wouldn’t call it a crisis, but there are definitely cash flow constraints that government has. Over the years, these have been getting better and better on a continuous basis. In July 2023, we actually caught up and managed to pay suppliers 100 per cent. The government at the moment is awaiting money from JSE, which is apparently coming in February 2024. We do have a build-up of outstanding payments from suppliers on the SACU receipts side of payments. Just before SACU receipts come in, there might be a build-up of up to 60 days payments for suppliers, but when the SACU money comes in, payments are then made and suppliers are generally settled at that point. Fortunately, last week, SACU money came in and this week, we are busy paying suppliers,” he said.

The minister added: “The current cash flow situation is definitely not something to be alarmed about; civil servants will continue getting paid, elderly grants have been budgeted for, even well for Free Primary Education, OVC grants. There has also been a catch up this week on capital projects payment that have been delayed. I just want to allay fears, there is nothing to be concerned about, even though we are tight on the cash flow, but we will improve on a continual basis.”

The minister explained the different types of suppliers and how they were all paid at the Treasury Department. The minister said first on the list of payments were urgent suppliers, mostly from the Ministry of Health. He said every week, they prioritised health payments. Further, the minister stated that the Ministry of Health had an annual budget of E2.7 billion, of which E700 million was for medicines. Rijkenberg said this financial year, the ministry would be spending all of it and had requested a supplementary budget.

“In the supplementary budget that I will be tabling with the budget, you will find at least E60 million. By the end of the budget year, we would have spent at this stage E760 million on health suppliers of medicine,” he said. The minister added that other priority suppliers were fuel advances, schools, and education suppliers.

Outstanding

“Every week, we prioritise health payments. We had a meeting with the Treasury this morning, and the Treasury has also sent some officials to the Ministry of Health, because at the moment, there are payments that have been delayed and are outstanding. The Ministry of Health and Finance are working very closely, to get those to Treasury and start payment. “At the same time, there is a constant build-up because we have 60 days outstanding payments sitting at the Treasury, that will be settled this week after which we will be up to date on the 30-day payment cycle and hopefully, the JSE money comes in February, which should put us on a permanent up-to-date payment situation,” he explained.

The minister said they would prioritise suppliers because they were the only way to economic recovery.  He said they had noted a noticeable amount of economic growth of about 4.5 per cent. “The performance is improving because when you pay suppliers on time, they perform better as they pay people and taxes, thus boosting the economy,” he said. He noted that there are temptations or suggestions that government could require financing to settle arrears while waiting for these payments. The minister said if they were to accelerate settling arrears by going through expensive debt, the country might end up drenched in debt.

“We have permission to raise E4 billion on JSE. We do not need E4 billion for this problem, but we have encountered delays. Our plan is the money we raise on JSE will settle arrears once and for all and put this problem behind us,” he said. Furthermore, the minister said government, since 2018, managed to reduce the fiscal deficit (the percentage to GDP of the money being spent versus the money that you have) from  17.5 per cent to 2.2 cent to date, while the target is 1.5 per cent.

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