MINISTER WRONG OVER SACKING WORKERS

Swaziland’s Minister of Economic Planning and Development Prince Hlangusemphi seriously misled people when he said that the International Monetary Fund (IMF) was forcing the government to sack workers.

Hlangusemphi said this as part of a larger attack on the IMF, which he claimed did not want to help Swaziland get out of its financial mess.

Hlangusemphi was speaking in an interview with the Swazi Observer, the newspaper in effect owned by King Mswati III, when he said the government would not downsize the Swazi civil service ‘as recommended by the IMF’. He went on to say that if the government sacked workers without consultation it would be in trouble with organizations such as the International Labour Organisation (ILO).

But where Hlangusemphi is wrong is that the IMF has not called for civil servants to be sacked, but it has suggested the government wage bill should be cut by 5 percent. It has never been the IMF’s case to cut jobs of ordinary workers: that suggestion came from the Swazi Government itself.

The IMF has been very public in its advice to the Swaziland Government. In November 2011, for example, Joannes Mongardini, Head of the IMF Mission to Swaziland, said there were other ways to reduce the public expenditure bill in Swaziland without cutting the jobs or wages of ordinary workers.

Mongardini told the BBC World Service Focus on Africa programme the money could be saved from cutting spending on the army, the police and politicians’ allowances.

‘We are recommending for the government to reduce the wages bill by 5 percent. This is a relatively moderate amount compared to countries like Greece, Portugal and Ireland.’

Asked by the BBC about the position of public service workers who have complained about the possibility of retrenchments and wage cuts, Mongardini said, ‘We fully understand that this is a politically difficult decision to make.

‘Having said that, the government can find other ways to reduce the wage bill that will not require salary cuts. In particular, some of the largest increases in the wage bill in recent years are due to increased security forces and police personnel and they also are due to very generous allowances that the government has given to politicians and top civil servants.’

Hlangusemphi also misled the House of Assembly last week when he claimed that the IMF did not want to help Swaziland access funding to revive its economy. He said the IMF had prevented organisations such as the African Development Bank (AfDB) from giving loans to government. 

But Hlangusemphi knows (or should know) that the reason why Swaziland asked for the IMF’s assistance was so it could convince international financers that it could repay any loans it might receive. To do this the Swaziland Government drew up what it called a Fiscal Adjustment Roadmap (FAR) that set out a number of measures it would introduce to cut spending and increase income. But, the government failed to implement its own plan.

Because of this failure, the IMF said in April 2012 it could no longer support the government. It was up to the government to come up with a new plan that might help to save the economy.

The government has not done this. Earlier this month (November 2012) the IMF reported the government had failed to improve the economy in any appreciable way and could not pay its bills. This meant immediate public expenditure cuts were needed if the government was to meet the budget targets it set itself in February 2012.

In a statement following its visit, the IMF said the government would find it difficult to pay its bills this year, without increasing domestic borrowing. It also said that one reason for this was that the government had increased spending this year on security.

Since the IMF’s November statement, there have been a number of attempts from the Swazi Government to deflect attention away from its own failings and to claim the IMF did not know what it was talking about.

Immediately after the IMF reported, Finance Minister Majozi Sithole, described the IMF as biased, negative and unrealistic.  

This was after Mongardini had warned the government of bad times ahead, including a looming negative impact on sugar exports, a tourism sector that had declined by between eight and nine percent, low investor confidence, an envisaged decline in receipts from the Southern African Customs Union (SACU) and possible repatriation of money from local to South African banks.

See also

IMF REPORTS GOVT ECONOMIC FAILURES

http://swazimedia.blogspot.com/2012/11/imf-reports-govt-economic-failures.html

IMF REPORTS GOVT ECONOMIC FAILURES

Swaziland’s Government has failed to improve the economy in any appreciable way and cannot pay its bills. This means immediate public expenditure cuts are needed if the government is to meet the budget targets it set itself in February 2012.

These are the latest findings of the International Monetary Fund (IMF), which has just finished a visit to Swaziland.

The IMF has been assisting the government to get the economy back on track after years of neglect by successive governments, all handpicked by King Mswati III, sub-Saharan Africa’s last absolute monarch.

Even though the Swazi Government created its own plan for what it called ‘fiscal adjustment’, which included reducing public expenditure and cuts in public sector jobs, it has done next to nothing to implement the plan.

Now, the IMF has spelled out the consequences of this inaction. In a statement following its visit, the IMF said the government would find it difficult to pay its bills this year, without increasing domestic borrowing. It also said that one reason for this was that the government had increased spending this year on security.

The government’s failure to pay its suppliers had meant that small businesses in the kingdom had suffered and ‘been forced to cut down their operations’, it said.

The IMF said for the government to meet its own financial plan it needed an ‘upfront reduction in the wage bill of 300 million emalangeni, (US$38 million) [and] additional cuts in non-priority recurrent expenditures’.

The IMF pointed out, ‘These cuts will require sacrifices by all segments of Swazi society, but the basic needs of the most vulnerable should be protected as far as possible.’

This is not the first time the IMF has stressed that some people in Swaziland are wealthy, while others are poor, and the better-off should make a greater sacrifice for the common good. In November 2011, Joannes Mongardini, leader of the IMF mission to Swaziland, suggested to the BBC that even King Mswati and the Royal Family should play their parts by reducing their budgets. 

Nothing happened, although in October 2012 Swazi Finance Minister Majozi Sithole told the media that King Mswati was prepared to peg the amount of money he takes from the Swaziland budget and not increase his budget in future years. This statement was received with widespread scepticism, since the king continues to spend the Swazi people’s money on luxuries for himself. 

In its most recent statement, the IMF also said the government would have to make further cuts in the 2013 – 2014 national budget, including cuts in what it called ‘non-priority spending’. It added, ‘Capital projects should be prioritized and funded based on maximizing their impact on economic growth and poverty alleviation.’

This implies that projects such as the Sikhuphe International Airport that is at least two years behind schedule for completion would not get any more money. This is unlikely to be the case, because even though the airport has been widely criticised as unnecessary and a ‘white elephant’ it is supported by King Mswati, to the extent that outside of Swaziland, the airport is often referred to as the king’s ‘vanity project’.

The IMF restated a point it has made for many years that many of Swaziland’s economic problems were not related to the global economy, but were situated within Swaziland. It said, ‘Growth in Swaziland has been weaker over the last ten years than in other SACU [Southern Africa Customs Union] countries. This is associated with high unemployment, widespread poverty, rising inequalities, and the highest HIV/AIDS prevalence rate in the world.

‘A poor business climate and the lack of competitiveness are key obstacles to attaining higher sustainable growth and creating jobs.’

See also

WHY IMF MUST DITCH SWAZILAND

http://swazimedia.blogspot.com/2011/02/why-imf-must-ditch-swaziland.html

SWAZI ECONOMY SET TO HIT ROCKS

Swaziland’s economy is heading for a shipwreck of Titanic proportions after news that the International Monetary Fund (IMF) has withdrawn support for the kingdom’s financial recovery plan.

Since 2010 the IMF has been working 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.

The government did force through 10 percent salary reductions for politicians, but last month (March 2012) MPs voted to have their pay restored because they said it was unfair that they were the only public sector workers to have taken the cut.

This week, Joannes Mongardini, head of the IMF mission to Swaziland, confirmed that it was no longer working with Swaziland on the staff-monitored programme.

He told the Times of Swaziland, the only independent daily newspaper in the kingdom, ‘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.

Without the support Swaziland is alone. There is little hope it can secure loans from international banks and even a E2.4 billion (US$307million) loan that had been negotiated with South Africa looks likely to be withdrawn as one of its conditions was that Swaziland provided evidence that it was tackling its economic problems.

So what happens next? Since news of the IMF withdrawal broke this week there has been no public statement from the Swazi Government. We know from the past that it has been less than honest with the Swazi people about the state of the economy, with Barnabas Dlamini, the Prime Minister, even claiming a year ago in April 2011 that it had the ‘letter of comfort’ from the IMF supporting its bid for international loans, when no such letter existed.

Finance Minister Majozi Sithole, however, told local media this week he expected to have further talks with the IMF and World Bank starting next Thursday (19 April 2012), but it is difficult to see what they have to talk about, unless the Swazi Government can demonstrate it has control of the economy – which clearly it does not.

See also

IMF CALLS FOR SACRIFICE FROM THE KING

http://swazimedia.blogspot.com/2011/11/imf-calls-for-sacrifice-from-king.html

SWAZILAND FAILS ITS IMF TARGETS

swazimedia.blogspot.com/2011/08/swaziland-fails-its-imf-targets.html

NO NEED FOR WAGE CUTS, SAYS IMF

There is no need to retrench civil servants or cut their wages to save the Swaziland economy, a top IMF official said.

Joannes Mongardini, the Head of the International Monetary Fund (IMF) Mission to Swaziland, said there were other ways to reduce the bill in Swaziland without cutting the wages of ordinary workers.

This contradicts the Swaziland Government that has demanded cuts in salaries of 10 percent across-the-board for public service workers.

Mongardini told the BBC World Service Focus on Africa programme yesterday (16 November 2011), ‘We are recommending for the government to reduce the wages bill by 5 percent. This is a relatively moderate amount compared to countries like Greece, Portugal and Ireland.’

Asked by the BBC about the position of public service workers who have complained about the possibility of retrenchments and wage cuts, Mongardini said, ‘We fully understand that this is a politically difficult decision to make.

‘Having said that, the government can find other ways to reduce the wage bill that will not require salary cuts. In particular, some of the largest increases in the wage bill in recent years are due to increased security forces and police personnel and they also are due to very generous allowances that the government has given to politicians and top civil servants.’

WE HAVE TO TALK ABOUT THE KING

Musa Ndlangamandla, the editor-in-chief of the Swazi Observer newspaper, today lambasts the Swaziland Government for stifling the debate about the cause of the financial crisis the kingdom faces.

Ndlangamandla says there is ‘a growing tendency by some in the echelons of power to go to all lengths to stifle public discourse and debate,’ about the economy. He goes on to name Barnabas Dlamini, the Swazi Prime Minister, as one of those culprits.

Writing in the Observer today (17 November 2011) Ndlangamandla tells of a meeting of ‘stakeholders’ to discuss the economy that was cancelled by the government. He writes, ‘This collection of influence brokers in the country’s economic, social and political strata would also have dissected our general spending patterns as a country to try and come up with answers and a way forward on the sad fact that despite the untold grinding poverty the country has faced in the past two decades, over 80% of the country’s wealth is shared by a mere 10% - the privileged few.

‘This group, I suspect, would also have gone through government’s bullet-holed and dog-eared balance sheet with a view to come up with realistic strategies to re-prioritise budgetary allocation.’

Maybe they would. And maybe they wouldn’t. Who knows? because the meeting didn’t take place.

But you can bet your last Rand that they wouldn’t have mentioned the most privileged of ‘the privileged few’, King Mswati III, Sub-Saharan Africa’s last absolute monarch.

The King has made no sacrifice during the present economic turmoil and no one in Swaziland – least of all Ndlangamandla and the Observer, the newspaper in effect owned by King Mswati himself, has publicly dared to point out the fact that the King and his family swill around in vast wealth while some of his subjects are so poor they have to eat cow dung before they can take their ARV medicines for HIV.

But last night a small crack appeared. Interviewed by the BBC World Service radio Joannes Mongardini, the Head of the IMF mission to Swaziland, was asked whether the King and his expenditure is an issue?

Mongardini is a born diplomat. Quietly, he responded, ‘The expenditure clearly poses a factor in transfers to His Majesty and in the context of a fiscal crisis we would expect all Swazis to make a sacrifice in order to reduce government spending,’ – which in diplomatic speak means ‘You Bet I Do.’

So, let’s not stifle the debate – let’s openly talk about the king, his wealth, and how as the most privileged of the few, he has sucked his kingdom dry.

And, if Ndlangamandla wants to be taken seriously as a journalist and commentator on important Swazi national affairs let him start the debate in tomorrow’s Swazi Observer.

See also

IMF CALLS FOR SACRIFICE FROM KING

http://swazimedia.blogspot.com/2011/11/imf-calls-for-sacrifice-from-king.html