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Friday, 15 July 2011

HAS SWAZILAND GOT BAILOUT OR NOT?

There is confusion today (15 July 2011) about whether the Swaziland Government has been granted a financial bailout so it can pay its public service salaries this month.

One newspaper says it has: but another says it has not. And they could both be right.

Here’s what’s been happening.

The Mail and Guardian (M&G) newspaper in South Africa is reporting an anonymous ‘Swaziland source’ saying that the Southern African Customs Union (SACU) will give Swaziland a E400-million (US$58 million) bailout with its next regular quarterly revenue payments.

The M&G says the information comes from ‘the presidency’ (presumably it means the South African presidency).

The M&G reports ‘another person close to the loan process’ saying, ‘This is a concession to help keep Swaziland above water and to stop the country from collapsing altogether. It buys South Africa time to work on a more comprehensive loan package.’

The M&G doesn’t make it clear if the E400 million from SACU is to be a loan or ‘aid’ that will not have to be repaid.

The M&G also says that talks are continuing about any possible loan that the South African treasury might make to Swaziland.

Meanwhile, the Times of Swaziland, the only independent daily newspaper in the kingdom, reports today that no decision has been made about the bailout.

It quotes an unnamed South Africa Treasury Department official saying talks are still continuing between the two countries and no decision has been taken yet.

It quotes the source saying, ‘Technical discussions between South Africa and Swaziland on possible assistance are on-going.

‘The process of granting any type of assistance will depend on what agreement is reached, as there is more than one way that assistance may be provided.

‘The South African government will communicate once any decision has been made.’

So what’s going on? It is possible that SACU independently of South Africa will bail out Swaziland for now, and South Africa will make up its mind later. So both news reports could be correct.

But why all the secrecy? If SACU is going to pass over E400 million why doesn’t it come out and say so. Why do we need to hear about this through anonymous sources? Let SACU tell us whether the money will be handed over and whether it is a loan that must be handed back. And are there any conditions attached to the deal?

We should remember that Swaziland is in the mess it is because the Swazi Government failed to stick to its own financial rescue plan that it agreed with the International Monetary Fund. Its economic governance is so poor the African Development Bank wouldn’t even discuss the possibility of a loan until Swaziland got its house in order.

Nothing has changed: the Swazi Government is not in control of the economy and if SACU does hand over E400 million it will just be throwing good money after bad.

And the Swazi Government shouldn’t think its problems are over if SACU coughs up the cash. E400 million won’t go far.

Majozi Sithole, Swaziland’s Finance Minister, is on record saying that the government salary bill is E323 million per month and ‘about E540 million is needed for the running of ministries’.

So if it is forthcoming the SACU money will last less than a month and then it will be back to square one for the Swazi Government.

See also

GOVERNMENT WILL WASTE ADB LOAN

http://swazimedia.blogspot.com/2011/05/government-will-waste-adb-loan.html

SWAZILAND ‘TO GET R400 MILLION BAILOUT

http://swazimedia.blogspot.com/2011/07/swazis-to-get-r400m-bailout.html

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