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Friday, 5 August 2011

SOUTH AFRICA LOAN ‘WAS INEVITABLE’

Business Day, South Africa

5 August 2011

SOURCE

EDITORIAL: Damned if we do and if we don’t

[Swaziland] is in dire straits financially, its reserves exhausted and about R1bn in debt falling due. Yet King Mswati, one of the world’s few remaining absolute monarchs, has continued to treat the treasury as his personal piggy bank. World Bank and International Monetary Fund officials who examined Swaziland’s accounts following an appeal for assistance discovered that at least R400m was spent last year on maintaining the lifestyles of the king, his 13 wives and the rest of the royal circus.

It may be costly, but the leverage SA retains over the BLNS countries remains useful — witness the pressure it was able to put on them when they were being tempted to seal binational trade agreements with the European Union on favourable terms that were to be denied SA, which wanted a regional deal.

It is the knowledge that SA has this power over King Mswati that has made both Swazi political activists — opposition parties are banned — and sympathetic local organisations such as the Congress of South African Trade Unions respond so angrily to the news that SA is to lend Swaziland R2,4bn to rescue it from bankruptcy. But this is short-sighted criticism; allowing Swaziland to collapse would not be in SA’s interests, not to mention the moral obligation we have to avoid untold suffering among its overwhelmingly poor population.

The loan may be unavoidable, but that does not mean SA cannot impose strict conditions aimed not only at ensuring the money is repaid, but that structural reforms are implemented that will prevent this kind of situation from occurring in future. These appear to be in place, although the required political change, especially moves towards giving Swazis a democratic voice, could have been spelled out to King Mswati more clearly.

The trouble is it is unclear what sanction SA has if he fails to honour his side of the loan agreement. Will the National Treasury refuse to transfer the second and third tranches of the loan, even though that would inevitably lead to Swaziland’s complete economic collapse?

We already have one basket case on our borders, ruled by a despot who doesn’t hesitate to make promises he has no intention of keeping. We do not need another.

To read the full editorial, click here.

See also

S AFRICA SETS OUT LOAN CONDITIONS

http://swazimedia.blogspot.com/2011/08/s-africa-sets-out-loan-conditions.html

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