Govt sets aside E1.4 billion budget cushion
“It is important therefore to be very vigilant in the manner we spend any increases in revenue.”
Finance Minister revealed that the volatility in SACU receipts caused the country’s economy to remain on an unsustainable path for a long time and hence the SACU Stabilisation Fund to cater for any reduced receipts in future.
MBABANE – Gross official reserves are expected to be positively affected by the projected increase in SACU receipts during the next fiscal year, but how sustainable will it be?
The above question had been the centre of conversations regarding the self-funded national budget of E26.44 billion presented by Minister of Finance Neal Rijkenberg at the end of February 2023 for the next fiscal year.
SACU is an acronym for Southern African Customs Union, an African regional economic organisation founded in 1910 where member states, Botswana, Lesotho, Namibia, South Africa and Eswatini maintain common external tariffs, share customs revenues and coordinate policies and decision-making on a wide range of trade issues.
The matter, once again, became centre of attention at the 2023 Post-Budget Seminar hosted by the Central Bank of Eswatini (CBE) and the Economics Association of Eswatini (ECAS) yesterday.
Minister Rijkenberg revealed that the volatility in SACU receipts caused the country’s economy to remain on an unsustainable path for a long time and for that reason, he tabled regulations for the SACU Stabilisation Fund. He said they were proposing to put almost E1.4 billion into the fund to cater for any reduced SACU receipts in the future.
The minister told participants in the seminar that the country was at an advantage to create such a cushion since the SACU receipts were the highest in history. SACU receipts for Eswatini increased by 102 per cent from E5.8 billion in 2022/2023 to E11.75 billion in 2023/2024.
HigHest
“This is the highest amount that the country has ever received from the regional bloc and was driven by a higher than projected out-turn of a 25 per cent increase in the projected size of the CRP for 2023/2024 compared to 2022/2023 and an increase in Eswatini’s share of total intra-SACU imports from 9.6 per cent in the revenue sharing framework for 2022/2023 to 10.8 per cent in 2023/2024. “Since this year’s budget is driven by sustainability, this fund should ensure that we remain on a sustainable path in the long-term,” said the min
ister.
Rijkenberg said there was a need to ensure that the country does not fall into an economic shamble in the near future. He said the projected revenue estimates for 2023/24 were at a record high due to the higher-than-average SACU receipts and were bound to improve domestic collections by the Eswatini Revenue Service (ERS).
The minister stated that while this presented a very important milestone for the country, it was equally important to understand the underlying consequences of the volatility of SACU revenues.
“Any overestimates of the SACU revenues are usually corrected over the subsequent two years. It is important, therefore, to be very vigilant in the manner we spend any increases from this revenue source. At this point, I need to commend ERS for adopting a more client-centric approach in the collection of taxes,” said the minister.
ECAS President Professor Mike Matsebula, in a preamble, thanked the minister for the budget he presented in Parliament and said it was important for it to be socially inclusive and balance between the social spend and the eco