Government now set to diversify resource mobilisation, finance deficit
AFTER the first-time issuer ratings of B2 by Moody’s, government is now in a better position to diversify resource mobilisation and to finance the budget deficit, but there is a small price to pay.
Up until now, government has been raising money through the local financial markets.
The county’s 2017/18 budget showed a deficit of 8.2 per cent of GDP (E4.8 billion) for 2017/18.
Ministry of Finance Principal Secretary Bheki Bhembe said government goes to the domestic financial market every week to look for funding.
This is done through the auction of Treasury Bills which the Central Bank of Swaziland (CBS) auctions weekly on behalf of government.
CBS General Manager Financial Markets Melvin Khomo said since the rating outcomes were published internationally, this was anticipated to increase international investors’ appetite in government securities and further allow government to tap into international financial markets.
“But there is still a lot of work to do. We still need to conduct international road shows to promote the country as a potential borrower,” he said.
Khomo said most African countries have in the past few years tapped into international bond markets.
He said the B2 rating, though it was viewed speculative and high credit risk could not be a hindrance for the country to tap into international capital markets.
He said this was because a lot of countries who have gone to international capital markets to raise finance were from both the investment category and the non-investment cate- gory.
“The only differentiator is the price you charge,” he said.
At B2, the country sits alongside the likes of Angola, Ethiopia, Nigeria, Rwanda, Uganda and Zambia and sits one notch lower than Kenya, Lesotho and Senegal.
Countries with the highest ratings include Botswana and Mauritius.
Khomo said most countries within the Southern African Development Community ( SADC) were rated between B1 and B3.
CBS Governor Majozi Sithole said they were not content with the results and this was not the time for the country to rest on its laurels.
“We need to address the areas that will help to be upgraded and we will have to work hard on these,” he said.
Captains try's first of industry following the presentation credit rating report from Moody's. of the coun-
CBS GM Financial Markets Melvin Khomo explaining the benefits of sovereign credit rating.