Govt prepares for rainy days
. . . E2.3bln in SACU stabilization fund
► Government sets aside E1.5 billion from SACU receipts’
► Increases from E875 million in the financial year 2023/24
THE Government of the Kingdom of Eswatini has set aside a sum of E1.5 billion for the SACU Stabilization Fund for the financial year 2024/25.
This brings the total to E2.375 billion as a sum of E875 million was set aside in the year 2023/24. The SACU Stabilization Fund was established to reduce the country’s overreliance on the SACU receipts.
According to a report delivered by Marwick Khumalo, the Chairman of the Ministry of Finance Portfolio Committee, which was adopted and passed in Parliament on Friday, the E13.07 billion received from SACU, only E11.57 billion forms part of the Total Revenue available to fund the 2024/25.
In his Speech from the Throne, His Majesty King Mswati III indicated that the national budget is set to receive a boost from the taxes collected from internal and external revenue sources.
“This bodes well for the new Parliamentarians who will have resources to work with. We strongly encourage the government to establish a stabilization fund as a precautionary measure for potential future declines from these revenue sources, starting immediately. Sisu sibekelwa ngaphandle maswati,” the King said during the Official Opening of the first session of the 12th Parliament on February 9, 2024.
In his budget speech on February 26, 2024, the Minister of Finance Neal Rijkenberg highlighted the importance of understanding the underlying consequences of the volatility of the SACU revenues.
“A SACU Stabilization Fund has now been established to cushion against future fluctuations in our SACU receipts. Close to a billion is already in the fund, and we plan to increase this with another E1.5 billion in the 2024/25 financial year,” the Minister said.
The country received the highest SACU receipts E13.07 billion for the financial year 2024/25 and Rijkenberg when announcing the windfall on January 11, 2024, even said Emaswati will start “feeling it in their pockets”.
Compared to the 2023/24 level, the SACU revenue grew by 11.15 per cent. In the 2023/24 financial year, the country’s SACU receipts were E11.75 billion and were 102 per cent higher than the E5.8 billion of 2022/23.
SACU consists of Botswana, Lesotho, Namibia, South Africa and Eswatini. All customs excise and additional duties (trade taxes) collected in the SACU Common Customs Area are paid into the common revenue pool and shared among member states.
Member states share of the pool is disbursed or determined by the SACU agreement’s revenue-sharing formula. The current Revenue Sharing Formula has three components, namely, the Customs Component, the Excise Component and the Development Component. The Customs share is allocated based on each country’s share of intra-sacu imports.
Rijkenberg, during the press briefing, when announcing the SACU receipts windfall, explained that of the E13.07 billion, E1.8 billion was surplus revenue collections emanating from the 2022/23 financial year, while the E11.26 billion was based on the projected common revenue pool projection for 2024/2025 which has grown by 6.6 per cent from the 2023/24 level.
He explained that some of the factors that led to the increase were that Eswatini’s imports from SACU, during the year under review increased by 25.24 per cent compared to the previous year. The Minister said the increase was a good indication of the economy and economic growth.