The coronavirus pandemic in
Swaziland (eSwatini) might lead to social unrest because the government is
failing to support people living outside of large cities, the global financial
analyst Moody’s reported.
The coronavirus (COVID-19) pandemic
came on top of an ongoing
financial crisis in the kingdom that had left the government with large debts
that it failed to stabilise, Moody’s said in a report on Monday
(20 July 2020).
Swazi Government revenue
has fallen during the coronavirus crisis that began in March 2020 and the
government’s response mainly seeks to re-prioritize spending rather than
increase total spending.
Moody’s reported the government had failed to stabilize, let alone reverse, ‘a prolonged increase in its debt burden’.
Moody’s reported the government had failed to stabilize, let alone reverse, ‘a prolonged increase in its debt burden’.
It added, ‘Reforms are
often stalled by the need to navigate eSwatini’s complex political system,
including the royal family, its advisers and the cabinet.’ King Mswati III rules
Swaziland as an absolute monarch and he appoints the Prime Minister and cabinet
members.
Moody’s reported that on 15
July 2020, a committee met to discuss the government’s financial rating. The
main points raised were that Swaziland’s economic strength, had ‘materially
decreased’, including its ‘debt profile’.
On the general health of
the Swazi economy, Moody’s reported, ‘eSwatini's economy has experienced
several years of low growth, averaging just 1.9 percent over the past five
years. After a significant contraction in 2020 output as a result of the
coronavirus shock, Moody’s expects eSwatini to return to this trend of
relatively low growth over the foreseeable future.
‘Containment measures to
stem the spread of the coronavirus weigh on economic activity in 2020, while
the economy is also affected by the disruptions to global supply chains,
including in industries like textiles, forestry and transport.
‘Beyond the impact of the
coronavirus pandemic, growth remains constrained by a number of structural impediments
related to the poor business environment for private investment. Prevailing
poverty and income inequality also weigh on the economy’s growth potential.
‘Poverty and income
inequality are pronounced because of low growth and job creation, with about 60
percent of the population living below the poverty line, while 38 percent live
in extreme poverty.’
There was also high youth unemployment, it added.
There was also high youth unemployment, it added.
Moody’s said there were
material social risks ‘because of the
large income inequality between royal family members and the general population.
While there is a pro-democracy opposition group, media
is tightly controlled and regulated.’ Moody’s regarded the coronavirus
outbreak as a social risk because of its ‘substantial implications for public
health and safety’.
It added, ‘The coronavirus
pandemic may also cause social unrest as the government’s capacity to provide
support for those living outside of large cities is currently stretched.’
Separately, the Swaziland Central
Statistical Office reported the kingdom was officially in recession
following two quarters of negative growth. Gross domestic product declined by
6.5 percent in the first three months of 2020. This followed a decline of 1.2
percent in the fourth quarter of 2019.
See also
Thousands of job lay-offs hit Swaziland as
coronavirus lockdown continues
IMF
reports Swaziland public debt rising, foreign reserves fallen ‘below adequate
levels’
More
money goes to Swaziland’s absolute monarch, despite kingdom’s financial
meltdown
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