Govt should prioritise job creation - economist
MBABANE – Seasoned Economist Thembinkosi Dube says in the budget speech slated for today, the expectation is that government will prioritise reducing the high unemployment rate in the country.
Unemployment rate in Eswatini was projected to reach 26 per cent by the end of 2022, according to Trading Economics global macro models and analysts.
The worst affected group is the youth, with about 60 per cent of them without jobs.
Young people with tertiary education are not immune from unemployment. According to Eswatini National Skills Audit Report (2022), more than half of Eswatini’s graduates are unemployed.
Deliver
Minister of Finance Neal Rijkenberg is supposed to deliver his last budget speech on his five year term in office, in Parliament today.
Dube said one of the ways in which government could improve the situation of high unemployment in the country involved incentives, through taxes which promotes entrepreneurship, thus availing multiple jobs for the citizens. He stated that one of the taxes was the corporate tax, which government should consider decreasing.
However, he pointed out that the unfortunate part was that tax was one of the main areas where government gets its revenue and he shared that with that in mind, there should be conditions on the corporate tax and those businesses seen to be expanding have their corporate tax cut.
“The issue of high unemployment rate in the country remains one of the prominent issues that needs to be addressed promptly because they have a spill over in the poverty rate, which is also affecting the country,” Dube said.
Another issue that the economist touched on was the one revealed by Ministry of Finance Principal Secretary Sizakele Dlamini, that there would be no budget for new capital project this year. She revealed this through the budget circular, which was released a few weeks back.
However, ongoing projects will still continue, such as the Nhlangano-Sicunusa
Road and the International Convention Centre and Five Star Hotel (ICC&FISH). Both these projects are subject to forensic audits due to the elastic nature of their budgets since over half a decade ago.
“The circular aims to assist spending entities in formulating the Medium Term Fiscal Framework (MTFF) Budget Estimates focusing mainly on 2021/22 outruns (whose estimates are firm) and the outruns for 2022/23 (whose estimates are indicative only), accumulation of arrears, year-end accruals and deficits in the trading accounts (if any). It further seeks to communicate budget ceilings to which spending entities are expected to align their priorities in the preparation of the budget for 2023/24 financial year,” said the PS at the time.
Dube said capital projects were one way government injected money into the economy and if it was announcing that there would be no budget for capital projecs, that was basically contracting the fiscus and it was in no way helping the current economic situation in the country.
Projects
“It is not possible for government to allocate zero budget on capital projects. The only thing could be that government is reducing the budget for same, not to suspend it completely. They provide economic basic needs like employing our brothers and sisters. They should not be viewed as a waste of funds by government but they are a necessity,” he added.
On the issue of public roads being damaged across the country due to the consistent rains received over the past few days, the economist said there was no expectation that the budget would be ballooned by that because the thinking was that when government built a road, it reserves money for that road to be maintained.
“Unless, of course, government did not have money reserved for the maintenance of the roads,” he said.
However, he did highlight the importance of road networks, as it was beneficial to local enterprises and the local economy among other things.
In his own words, Minister of Finance Neal Rijkenberg said: “My team has done a great job of preparing the budget and the speech.”
A table showing the budget allocations in past two years
2022/23 2021/22
E23.2 billion
E24.4 billion
the shortage of drugs and pharmaceuticals in public health facilities.
On the other hand, the Education sector has faced a number of challenges, which included the shortage of scholarships in tertiary institutions, stagnant grants for the free primary education (FPE) programme and the orphaned and vulnerable children (OVCs).
There has also been the recurring challenge regarding the shortage of teachers in schools.
Realistic
Last year, Sibiya applauded Rijkenberg for reducing the national budget and aligning it with realistic revenue projections. He said this was a bold move, yet necessary.
He expressed his belief that the national budget could have been reduced more as government need not create unnecessary expectations for the people.
Sibiya said it was important to manage expectations as the revenue target misses were very precarious to business. Sibiya said the revenue target misses gave birth to the challenge of arrears.
This, he said, killed businesses which relied heavily on the cash flow.
Sibiya said if the expectation was not created and no resources expended to that endeavor the entities might have survived. “I would rather call it a relatively realistic budget, yet ways from being a pro-poor budget.”
The economist had leading to the budget speech proposed that if the budget could be contracted to E20 billion so that it could be easily funded.