Budget - Finance minister
to him as the current Cabinet had been able to turn things around by bringing confidence to international financial institutions, to assist in funding certain programmes.
In the 2021/2022 budget speech, the minister had stated that government was introducing a capital gains tax for businesses aimed at closing loopholes that businesses were using to pay less tax.
The minister had said government intended to lift the tax brackets, leaving more cash in people’s pockets earning less than E250 000 per year.
“Individuals will now only start paying tax from E4 000 per month instead of E3 500 per month. Unfortunately, we cannot afford to have this reduction other than lifting the upper limits of those earning more. The proposal is to lift the upper tax bracket from 33 per cent to 36 per cent. This would mean that 80 per cent of the tax payers would be better off with more money in their pockets and 20 per cent of higher income earners paid more than E300 000 per year would be worse off,” he had explained.
However, Parliament threw out this suggestion, resulting in the taxes remaining unchanged.
On the other hand, University of Eswatini Economics Lecturer Sanele Sibiya concurred with Rijkenberg that the national budget was putting money into the pockets of people.
He said the investment by government on capital projects was commendable as it would create employment.
However, he said the minister should have outlined how government was planning to ensure that every company in close proximity to the capital projects would benefit.
Allocation
It is worth noting that Rijkenberg on Friday announced that the total budget allocation to capital programmes amounted to E5.85 billion, which reflected a E500 million increase from last year’s budget allocation. This, he said, resulted in the total expenditure for 2023/24 showing an increase of 14 per cent compared to last year’s budget.
In light of this, Sibiya said: “This is a great budget but one would have hoped that the minister would outline programmes that ensure that there was skewed equitable distribution of resources.”
The economist said it would have been better if government had initiatives that guaranteed that the procurement system would empower every sector in the country and not result in just a few people benefitting from the capital projects expenditure.
Leading to the national budget, Sibiya had said his anticipation would be that it leaned more towards capital investments instead of items that would become recurring expenditure.
Sibiya expressed an anticipation of marginal increase on social grants, which included that of the elderly and also 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.
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.
This was a hike from E5.8 billion in 2022/23 to E11.75 billion. This, according to the Minister of Finance, was the highest share that the country had 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 would be paid together with the 2023/24 revenue share and also 25 per cent increase in the projected size of the CRP for 2023/24 compared to 2022/23.
Instead, Sibiya had said the most that could be done was to invest in capital projects which would bring employment. The economist had opined that government should invest in initiatives that would strive to bolster the economy and absorb people into the active labour sector.
“In the job creation space, 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 (SMEs) and integrating them in the value chain, which is true redistribution.”
He had also 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.