Business Day, South Africa
6 July 2011
Bank ‘offered Swaziland rescue funds’
THE African Development Bank offered Swaziland $124m to bail out its beleaguered finances as far back as February, Business Day reliably learnt yesterday (5 July 2011).
A source close to the bank said the funds were "readily available" to boost Swaziland’s struggling economy. The amount was to be released only when Swaziland acceded to certain fiscal conditions, including further financial transparency and reining in the discretionary powers that King Mswati has over the budget.
Donald Kaberuka, president of the African Development Bank, visited Swaziland in February "dangling a carrot" to help the kingdom through its crisis.
"The president went there dangling this amount and told the king, here’s the cheque but you must institute fiscal reforms for you to qualify for it," the source said. During his visit Mr Kaberuka met with King Mswati, Prime Minister Barnabas Dlamini, Finance Minister Majozi Sithole and former public works and transport minister Elijah Shongwe.
The African Development Bank is the latest institution to have been approached by the kingdom in a desperate attempt to secure financial assistance.
SA’s Treasury last month reluctantly confirmed to be in possession of an official request for a financial aid package.
Several financial institutions including the World Bank and the International Monetary Fund have refused financial aid requests by Swaziland. The outcome has forced King Mswati to instruct his officials to begin talks with South African authorities on a preferential loan term.
Swaziland has lost 60% of its revenue from the Southern African Customs Union due to the financial crisis.
Mthuli Ncube, chief economist at the African Development Bank, could not confirm the $124m figure yesterday. "I am not aware of the amount as I did not form part of the team that went to Swaziland," Prof Ncube said.
Mupelwa Sichilima, a trade analyst at the Pretoria-based Trade and Industrial Policy Strategies think-tank, said the alcohol and beverages industries had been hardest hit by Swaziland’s economic implosion.
"One major retailer, Metro Cash & Carry, closed because of reduced demand. Local businesses that provide services to the government have also be affected," Mr Sichilima said.
In 2009, Swaziland’s overall imports increased 10,3% to 14,3- billion lilangeni.
Swaziland’s currency is pegged against the rand.
SA is a major source for Swaziland’s imports, with the country sourcing about 90% of its imports from SA. Major commodities imported during 2009 included machinery and transport equipment, chemical products, mineral fuels, food, and livestock.