The full consequences of the Swazi Government’s incompetence with the kingdom’s economy will mean drastic cuts in wages, new taxes on the poor, and the selling of state assets.
Top of the list is the demand by the IMF to slash the salaries of civil servants by 4.1 percent.
According to a report in the Weekend Observer, a newspaper in effect owned by King Mswati III, sub-Saharan Africa’s last absolute monarch, ‘the IMF wants the entire 4.1% paid by government this year as salary adjustment wiped out across the board’.
The Swazi Government met with the IMF in an attempt to get it to support a loan that would help the government to pay its wages this month (October 2010).
The Government produced a ‘Financial Adjustment Reform’ (FAR) programme to try to persuade the IMF it was able to run an economy.
The IMF has not given Swaziland support, but it has demanded a number of measures, some of which were in the FAR and some not. If the measures are taken, the IMF might give the government its support for a loan from the African Development Bank.
Ordinary Swazi people will be worst hit. As far as I know there are no plans to make MPs and government ministers give up their recent salary increases or the E60 million (8.5 million US dollars) in severance pay they will get when parliament ends in 2013. Prime Minister Dlamini stands to pocket E1.6 million himself.
Among the savage measures that will hit the poor are:
A mandatory 3 percent minimum tax for all those who are presently too poor to pay tax. This means, for example, that domestic workers, cleaners and gardeners whose annual pay is below E36 000 annually will now have to pay E3 from every E100 earned.
The introduction of Value Added Tax (VAT) on goods and services.
Capital spending on public services such as hospitals and schools will be cut by at least 1.1 percent.
There will be cuts in all government spending by at least 2.6 percent.
Also planned is a sell off of state assets such as the SPTC, telecoms group.