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Thursday, 9 August 2012

PM MISLEADS ON ECONOMIC RECOVERY


Swaziland’s Prime Minister Barnabas Dlamini was not telling the truth when he told Commonwealth Secretary-General Kamalesh Shama in a speech that the kingdom’s economic recovery strategy was ‘proceeding to plan’.

In fact, the opposite is the case. The International Monetary Fund (IMF) that had been supporting Dlamini and his government to put into place its financial and economic recovery plan withdrew from Swaziland because the government would not stick to it.

Dlamini told Shama at a dinner in his honour following a visit to the kingdom, that Swaziland faced economic difficulties. But, he added, ‘We have a Fiscal Adjustment Roadmap and an Economic Recovery Strategy proceeding to plan.’  

But that is not true. In April 2012 the IMF withdrew its support for Swaziland’s economic recovery plan. The IMF had been working since 2010 closely with the Swazi Government supporting its ‘fiscal adjustment roadmap (FAR)’ – a plan for recovery that included getting more revenue through taxes and reducing the public sector wage bill.

The Swazi Government drew up the plan and was aided by the IMF in its implementation through a procedure known as the staff-monitored programme. 

But, even though the FAR was the work of the Swazi Government and was completely under its control, the government failed abysmally to implement it.

Central to the plan was to reduce the public sector wage bill – that of teachers, nurses and other civil servants – by 10 percent. This it failed to do.

Joannes Mongardini, head of the IMF mission to Swaziland, confirmed that it was no longer working with Swaziland on the staff-monitored programme. He said in April, ‘Government has yet to propose a credible reform programme that could be supported by a new IMF Staff-Monitored Programme.’

He added that the national budget announced in February 2012 included, ‘recurrent expenditures that are higher than what can sustainably be financed over the medium term’.

He said the budget did not provide sufficient resources to repay all domestic arrears.

‘Finally, the budget allocates an increasing share of resources to some sectors at the expense of education and health,’ he said.

Swaziland sought the help of the IMF because it was nearly broke and needed loans from international banks, such as the African Development Bank and World Bank, to survive. It could not get these loans until it proved its economy was in order and IMF support in the form of a ‘letter of comfort’ would enable it to do this.

Following the IMF withdrawal, the African Development Bank said it would not pay US$100 million (E800 million) budget support due to the kingdom, because Swaziland has failed to tackle problems with its economy.

Prime Minister Dlamini’s dishonesty with the Commonwealth Secretary-General is nothing new.  In April 2011 he called a press conference to announce that he had received the letter of comfort from the IMF that would allow Swaziland to get loans from international banks. The news was greeted as a triumph and published all over the world. 
 
But it was not true. There was no IMF support and the Swazi economy has declined even further since then.

See also 

SWAZI ECONOMY SET TO HIT ROCKS
 
SWAZILAND LOSES MORE BUDGET SUPPORT
 
IS IMF LETTER LOST IN THE POST?

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