25 June 2011
The Swazi Handout
King Mswati III’s Swaziland is cannibalizing itself- surviving only by eating into central bank reserves and running up a huge domestic debt in order to survive. That’s why the cash-strapped king is asking South Africa for R10 billion.
South Africa is Swaziland’s neighbour, and the wealthiest country on the continent, and could most likely handle the handout, but Jacob Zuma’s government and trade union allies are insisting on reforms before handouts can take place.
At the heart of Swaziland’s crisis is the wage bill of civil servants, and King Mswati has failed to address this in any measurable way since the recommendations passed on to him by the International Monetary Fund.
He’s also facing accusations that his absolute monarchy is failing the country in terms of leadership- he appoints (and fires) cabinet ministers at will, and is allowing corruption on a grand scale.
The country’s fiscal troubles stem from a sharp decline in revenues from the regional Southern African Customs Union (SACU), which has historically accounted for two-thirds of the government’s budget, but the IMF also said the government had exacerbated its problems through profligate state spending.
South Africa: Dictator Bank?
South Africa has also been asked for a huge handout by Robert Mugabe, another dictator whose finances are also notoriously unaccountable.
Internally, Zuma is facing growing concerns that such bailouts are tantamount to the support of these regimes, and he’s becoming more wary of causing rifts in his local and international relationships, so he’s likely to use the debt relief requests as leverage in order to get those dictators to introduce reforms.
- Indicators: King Mswati III is struggling to keep his country afloat after his government (and family) have committed
- widespread corruption.
- Will South Africa commit funds to dictatorships without reform pressures?