Economy

MBABANE - Eswatini is embarking on a comprehensive reform of its public financial management (PFM) systems.

This is a monumental effort that just got bolstered by the formal approval of a E12 932 645 (UA 550 000) grant from the African Development Bank (AfDB).

According to the report published yesterday on the AfDB website, the funding is the cornerstone of the ‘Technical Support to Public Financial Management Reforms’ project, a strategic initiative designed to strengthen the nation’s economic governance, enhance transparency and ensure the more efficient and accountable use of public funds.

The project, with a total cost of E14 868 761.75 (UA 632 500), represents a crucial partnership between the AfDB and the Government of Eswatini, with the latter contributing in-kind support.

This timely intervention comes as Eswatini, a lower middle-income country with a population of 1.21 million, continues to navigate a complex economic landscape.

Despite a projected GDP per capita of E67 058 (US$3 797) in 2023, the nation has faced a prolonged low growth trajectory. This has contributed to a high poverty rate of 58.9 per cent and a youth unemployment rate estimated at a staggering 58.2 per cent, highlighting the urgent need for structural and governance reforms to create a more inclusive and prosperous society.

While recent fiscal reforms have seen a welcome rebound in GDP growth to 4.8 per cent in 2023, driven primarily by government efforts to control spending and clear domestic arrears, the country’s fiscal position remains vulnerable.

The volatility of revenue from the Southern African Customs Union (SACU), which historically accounted for up to 50 per cent of government revenue, has been a persistent concern.

Government’s decision to establish a SACU Stabilisation Fund with an initial E1 billion and a planned increase of E1.5 billion in FY2024/25 demonstrates a proactive approach, but external support is vital to complement these efforts.

The project is a strategic alignment with government’s own priorities, as articulated in the Eswatini National Development Plan (NDP, 2023-2028).

The NDP places a strong emphasis on achieving macroeconomic and fiscal stability and fostering a conducive environment for private sector-led growth.

This AfDB-backed initiative will directly support these goals by strengthening the institutional capacity to manage public finances, thereby improving confidence among investors and development partners. It is also a direct follow-on from a previous AfDB grant that concluded in 2016, which helped in the development of the PFM Bill and the PFM Reform Strategy.

The first and most significant component of the project is ‘Support to IFMIS Implementation,’ a pivotal move towards a modern, transparent financial system.

Its primary objective is to facilitate government’s transition from the current cash-based accounting system to the globally recognised International Public Sector Accounting Standards (IPSAS) Accrual system.

Full article available in our publication.

Minister for Finance Neal Rijkenberg. (Pic: File)