Johannesburg - Following a crippling fiscal crisis in the past four years, the Swazi economy is showing a slight improvement, although there is not much to celebrate.
The Central Bank of Swaziland recently announced a gross domestic product (GDP) growth rate of 1.7 percent in the financial year 2011/12, an increase from the 0.6 percent registered in the previous year.
Growth in the Swazi economy is a far cry from the rate of growth for sub-Saharan Africa as a whole. The region’s economy grew by 4.8 percent last year, although that was a decline from the 5.3 percent recorded in the previous year.
“We’re not yet out of the doldrums,” central bank governor Martin Dlamini warned. “In fact, we’re far from it, because we’re still seeing a growth rate that is less than 2 percent.”
In addition, “we’re still very much dependent” on the Southern Africa Customs Union (Sacu), he said.
The Swazi economy crumbled in 2009 when income from Sacu declined by 60 percent as a result of the global economic meltdown. This forced the Swazi government to ask for a R2.4 billion bailout from South Africa to help finance the national budget.
The deal fell through after King Mswati III’s regime failed to fulfil the loan conditions, including that he engage with dissenters who call for a multiparty democracy.
However, the economy seems to be getting back on its feet. Dlamini attributed the slight improvement to increased income from Sacu.
Sacu receipts helped the government to clear most of its domestic debts. The Swaziland Revenue Authority, which was launched at the height of the economic crisis in 2010, has increased domestic revenue by 0.5 percent of GDP.
The government claims this improvement despite defying the International Monetary Fund (IMF), whose structural adjustment programme demanded the wage bill be cut.
The IMF advised the government to slash salaries for public servants as a way of reducing the wage bill, which is the highest in sub-Saharan Africa at 18 percent of GDP.
Instead, the government awarded a 5 percent salary increase to public servants, including politicians, in June after a three-year salary freeze. Recruitment for the security services continues unabated.
Following its assessment in February, the IMF urged the government “to improve the business climate, move forward with the privatisation process and launch an international tender for a second mobile licence”.
It was not rocket science that the economy was picking up following the Sacu windfall, said an economist who preferred to remain anonymous.
Many businesses in the country were dependent on the government.
“Should there be a decrease in Sacu income again, we’re back at square one because there are not new strategies that the country has come up with to drive the economy,” the economist said. - Business Report