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Thursday, 19 May 2011

IMF THUMBS DOWN FOR SWAZILAND

AFP


18 May 2011


SOURCE


Swaziland finance reform gets thumbs down from IMF

MBABANE — The International Monetary Fund gave Swaziland's financial reform programme a harsh review Wednesday, a major blow to the crisis-hit kingdom's urgent attempts to secure international loans.

"A large fiscal adjustment is needed to bring the programme back on track and reduce the fiscal deficit in line with available financing," said mission head Joannes Mongardini in a statement at the end of an IMF visit to assess the government's belt-tightening measures.

Swaziland's government is teetering on the brink of financial collapse and may run out of money in the next two months. The small southern African country needs the IMF's blessing to borrow much-needed cash from the World Bank and the African Development Bank.

It will now have to hope for a favourable IMF assessment in August to access loans totalling more than $100 million (70 million euros).

The IMF is insisting Swaziland cut its bloated government wage bill, one of the world's highest at almost half of state spending.

But negotiations to get public sector workers to accept a 4.5 percent pay cut have failed.

The government's moves to slash salaries sparked large protests in April that were forcefully put down by King Mswati III's regime. Police beat, detained and tear-gassed protesters, drawing condemnation from international human rights groups.

The government is reeling after a 60 percent drop last year in revenues from a regional customs union, its main source of income.

The country has been paying civil servants by drawing down foreign reserves, but as the crisis deepens the cash is running out.

According to the IMF, Swaziland's central bank had to issue an emergency loan for the government to pay salaries in February.

The central bank governor this week said the crisis threatened to devalue the currency.

Dissidents hope to convert mounting frustration into momentum for political reform in the kingdom, Africa's last absolute monarchy.

"Our position is that this is an opportunity to change the government. I foresee chaos if people are not paid. The people are saying this is not an economic problem, this is a political problem," Vincent Dlamini, head of civil servants' union NAPSAWU, told AFP.

"We told the IMF to approach the king because we believe he has got the money and see if he can't assist. We are waiting to see if he will ever respond."

Mswati told his subjects earlier this year that "we need to work harder and sacrifice even more", but has not cut the $30 million he and the royal family receive from state coffers annually.

The king, whose fortune is estimated at $100 million by Forbes magazine, has ruled Swaziland for 18 years.

The jet-set lifestyle Mswati and his 13 wives has become increasingly controversial in the tiny kingdom, where nearly 70 percent of people live on less than a dollar a day.

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