Current govt has made E13bn loans
µµ A report titled ‘Public Debt Management Policy and Reports’ compiled by the Ministry of Finance states that the debt has been growing over time, in nominal terms, due to increased government expenditure on development projects.
MBABANE – Within three years of service, the current government has accumulated E13 bil lion in debts, surpass ing every other government that has led the country since independence.
Preliminary figures for the finan cial year ended 0arch 2022, show that total public debt is estimated at E27.8 billion, which indicates an in crease of 6.1 per cent from the E26.2 billion recorded in 0arch 2021.
The current debt stock does not in clude the E5 billion loan bill to be made through the bond issuance pro gramme of the -ohannesburg Stock Exchange -SE as it has not yet been granted.
$lso waiting is a E2.6 billion loan bill, made through the $frica Devel opment Bank for the 0khondvo 1g wavuma water proMect.
When they assumed office in 2018, the government had mapped out a stringent economic recovery strat egy and austerity measures, but the turn of events had led to a splurge of debts made through domestic and international sources. This was done in the backdrop of warnings by the World Bank and rating agencies that debts must be below 35 per cent of the country’s gross domestic product *DP in order for it to be manage able.
$ report titled µPublic Debt 0an agement Policy and 5eports’ com piled by the 0inistry of Finance states that the debt has been growing over time, in nominal terms, due to increased government expenditure on development proMects.
PUBLIC DEBT INCREASED
³For instance, public debt increased from E13.2 billion in 2018 to E26.1 billion at the end of 0arch 2021.”
Further, cost and risk character istics of the portfolio evolved dur ing the same period, driven mainly by the declining financing from the concessional, sources following the reclassification of the country into lower middle income category cou pled with the changing landscape in the international capital markets,” the report states.
Fiscal deficits have been blamed for the high debt ration, which is cur rently at 40.2 per cent of *DP, hav ing grown substantially from 21.1 per cent of *DP in 2018.
With the additional loans an nounced this year for proMects such as the State Parliament and others, the loan bill is expected to have in creased substantially.
The government has conceded that the debt stock poses a con straint to resources available for financing other social and develop ment needs.
This means, with debts having been made for capital proMects, when time comes for the country to spend on essentials such as health care, education, social grants etc, the State may no longer have the financial latitude.
³This borrowing has not been ade Tuately coordinated as there has been no yardstick established to monitor levels that can be considered critical. /ittle regard has also been given to the future implications of total debt on the *overnment of Eswatini and monetary policy, which poses a se vere burden on scarce budgetary re sources,” the report states.
RISK INVOLVED
With the introduction of the new policy, the ministry intends to put in place appropriate structures to mon itor and manage domestic debt obli gations and related contingencies.
The obMective is to reduce the costs of the debts and to ensure there is prudent risk involved. The ministry also wants to ensure there is coor dination between debt management and monetary and fiscal policies.
With the current trend, it is ex pected that the country’s debt ratio will increase and breach the thresh old of 50 per cent by 2026.
The report also states that ³The
A TABLE SHOWING SOME OF THE LOANS MADE SINCE 2018
385326( 2) /2$1
ICC&FISH
Liquidity requirements
Eswatini Economic Recovery Development Policy Loan
New Parliament
Emergency financial assistance under the Rapid Financing Instrument to support economic impact of the COVID-19 pandemic.
Manzini Golf Course Interchange
Disaster recovery site for the national data centre
Loan to finance the Manzini Region Water Supply and Sanitation Project. $02817
E1.2 billion
E1.889 billion
E560 million
E1.6 billion
E1.5 billion
E500 million
E165 million
E720 million
current fiscal stance is unsustainable and measures need to be taken in the medium term to adMust the primary balance.”
Despite the bleak economic out look, the report, however, states that all is not doom and gloom, should the
Taiwan
CBE
International Bank for Reconstruction and Development (IBRD)-World Bank.
India
IMF
AfDB
Export-Import Bank of India.
AfDB %2552:(5
State implement its Post &O9,D 1 Economic 5ecovery Plan, as well as the Fiscal $dMustment Plan which will include revenue enhancing as well as expenditure decreasing measure.
The ration of domestic debt to external debt stands at 60 40 re spectively for the period running to 0arch last year.
³0ultilateral institutions hold a greater share of the external debt portfolio at 62 per cent, $fDB De velopment Bank of $frica being the maMor creditor in this category. Private creditors commercial banks hold 28 per cent and the least being held by bilateral creditors at 10 per cent,” reads the report.
INCREASED INVESTMENT
To ease the burden and improve its balance sheet, the State has a resolve to over the medium term to focus on the strategic economic recovery plan that will ensure increased investment in key strategic areas such as food security and nutrition, manufactur ing, housing and public healthcare.
Eswatini 1ews sent the 0inistry of Finance a Tuestionaire about the escalation of debts but the &ommu nications Officer, Setsabile Dlamini, pointed to the Public Debt 0anage ment Policy for responses.
³The Tuestions you are asking are dealt with in the report,” she said.