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MANZINI – An economist does not anticipate the Minister of Finance, Neal Rijkenberg, will spend much on social grants.
Economist Sanele Sibiya said his anticipation of the national budget was that it would lean more towards capital investments instead of items that would become recurrent expenditure.
Sibiya expressed an anticipation of marginal increase on social grants, which include that of the elderly and scholarships. He said this was because grants, in general, would become recurring expenditure, which could not be financed in the near future as the source of income was volatile.
Budget
A large chunk of the country’s national budget is financed by the Southern African Customs Union (SACU) receipts. The SACU receipts for Eswatini this year increased by 102 per cent from E5.8 billion in 2022/23 to E11.75 billion.
This, according to the minister, was the highest share that the country ever received from the regional bloc and the factors that contributed were a higher than projected outturn of the 2021/22 Common Revenue Pool (CRP) and the surplus emanating from that will be paid together with the 2023/24 revenue share, as well as the 25 per cent increase in the projected size of the CRP for 2023/24 compared to 2022/23.
Meanwhile, Sibiya said increasing grants would become a challenge as SACU was reviewing the sharing formula, which could affect what the country would receive in the upcoming years.
This, he said, would then create a challenge for government as it would not be able to fund this expenditure. However, he acknowledged that if the country was self-sustainable in revenue generation, these items needed to be reviewed according to the inflation rate as well.
“The pressure for social grants is there but the question is, can we afford them? If yes, with what?” Sibiya said.
Instead, Sibiya said in the current scenario, the most that could be done was to invest in capital projects which would bring employment. The country’s unemployment rate stands at about 33.3 per cent, as per the Labour Survey Report of 2021 instituted by the Ministry of Labour and Social Security.
The economist said government should invest in initiatives that would strive to bolster the economy and absorb people into the active labour sector.
“In the job creation, we should also adopt policies that would empower small businesses that can subcontract and absorb more people to improve the cash circulation in the country,” he said.
Investment
Furthermore, he said there was a great need to attract foreign direct investment (FDI) as job opportunities were needed. He said the capital projects, which could include improving the road infrastructure, could lure investors into the country as they needed accessibility. This, he said, could also bolster the transport sector as the movement of goods in and out of the kingdom could be easier.
The economics scholar explained that redistribution should start by integrating community-based entities into the value chain. He said this could be attained through contractual agreements.
“We need to ensure that a percentage of the capital budget goes to uplifting small medium enterprises (SME’s) and integrating them in the value chain, which is true redistribution.”
On the other hand, Sibiya said there was high anticipation that the national budget this year would be increased.
He said this was because it was election year, which was a costly exercise. “I anticipate it to be around E26 billion in order to finance the elections and also improve the Health and Education sectors,” Sibiya said.
The two sectors have been engulfed with a myriad of challenges such that the Auditor General (AG), Timothy Matsebula, was roped in to investigate