Swaziland recovering from fiscal crisis
On February 26, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Kingdom of Swaziland. The Kingdom of Swaziland is recovering from a severe fiscal crisis. At the end of the fiscal year that ended March 31, 2012 (FY 2011/12), Swaziland registered a fiscal deficit of E 1.7 billion (6.0 percent of gross domestic product—GDP) and a stock of domestic arrears of E 1.6 billion (5.4 percent of GDP). While the deficit was lower than in FY 2010/11, the adjustment was partly achieved through cuts in education, health, and other poverty-alleviating spending. Domestic arrears also reduced economic activity, with real GDP growth projected to decline by 1.5 percent in 2012.
Higher transfers from the Southern African Customs Union (SACU) have improved fiscal and external balances in the first nine months of FY 2012/13. With SACU transfers more than doubling to 22½ percent of GDP compared with the previous fiscal year, fiscal space has been regained and the fiscal deficit is projected to register a small deficit. The government has been using the fiscal space to repay the central bank advance and to reduce domestic arrears by E 250 million as of end-September 2012. An additional E 720 million in arrears to the public pension fund has been restructured into a threeyear loan. Higher SACU transfers have also improved external balances by reducing the current account deficit and increasing central bank reserves. Gross official reserves of the Central Bank of Swaziland stood at about E 6 billion (3.1 months of prospective imports) at end–November 2012, a significant improvement from the trough recorded at end-March 2012.
The authorities have taken some measures to reduce fiscal and financial vulnerabilities. Revenue collection has improved with the successful introduction of a value-added tax in April 2012, complemented with continued strengthening of revenue administration. The ministry of finance has also drafted a new Public Finance Management bill, with technical assistance from the IMF, which is expected to be presented to parliament in early 2013. In parallel, the authorities responded to the vulnerabilities in the non-bank.