Mbabane - Swaziland’s R15.3 billion Budget calls for massive spending on housing, infrastructure and job creation but offers uncertain means to pay its bills.
In his first Budget speech as minister of finance, long-serving former governor of the Central Bank of Swaziland Martin Dlamini admitted at the weekend: “We will spend more than we can receive.
“In line with government’s plan to reduce dependency on Southern African Customs Union (Sacu) receipts, a large chunk of the Budget (51 percent) is projected to be financed by non-Sacu revenue which is estimated at R5.9bn,” he said.
However, with 49 percent of government revenue received from Swaziland’s Sacu allowance, an unprecedented rise in the government’s ability to raise tax revenue must ensue.
The new Budget is R2bn higher than the 2013/14 Budget. While Swaziland has enjoyed some success retrieving delinquent tax payments through the Swaziland Revenue Authority, which Dlamini praised in his speech, new tax revenue comes from cracking down on existing businesses and individuals and does not reflect new revenue streams.
Although a local milling operation was sold this month to South Africa’s Premier Foods for R100 million, this was an existing business and new foreign direct investment has been low for the past decade.
“Total domestic revenue is expected to amount to R5.5bn in 2013/14. This is 12 percent higher than last fiscal year,” Dlamini said.
“The balance of the Budget will be financed through the support of our development partners, who have committed to contribute R778.2m through grants, as well as through borrowing. We will need to borrow about R1.1bn to finance an estimated deficit of 3 percent of gross domestic product,” Dlamini said.
With unemployment at 40 percent, perennial underproduction of food and disinterest from foreign businesses, the government will step in to stimulate the economy.
About R600m will be spent on low-cost housing, creating temporary employment at government expense. Other public works jobs will come from irrigation schemes.
The government is spending only R28m to expand the country’s industrial infrastructure.
The greatest disconnect between government priorities and the reality of market needs was the government’s decision, affirmed by Dlamini, to build a new convention centre and five-star hotel in Ezulwini despite the absence of a business plan to determine if it is viable.
An Mbabane-based economist told Business Report: “There’s no demand for a new luxury hotel in Swaziland.
“The budget speech confirms government’s reality-challenged belief that if the private sector is not interested in doing business in Swaziland then government must become the private sector,” he said.