Tuesday, May 17, 2011


The Swaziland Government has received another blow to its economic recovery plan, with a claim from a top business leader that its tax policy will force businesses to close.

The government needs cash to pay public servants’ salaries and also to demonstrate to the International Monetary Fund (IMF) and the global financial institutions that it is able to run an economy.

As the Swazi economy approaches critical meltdown, the government put forward its ‘Fiscal Adjustment Roadmap (FAR),’ aimed at putting the economy on an even keel.

A major part of the FAR is collecting extra taxes from business.

But a Swazi business leader said there will be immediate closures of companies if tax rises go ahead.

Reuters news agency reports Hezekiel Mabuza, deputy president of the Federation of the Swaziland Business Community, saying the government has introduced new taxes which have worsened the plight of businesses already hit by the withdrawal of state contracts that had sustained them.

‘Some of these businesses that had contracts with the government ... have got no other markets that can sustain their businesses. So definitely they have to close down,’ Mabuza said.

‘Added to that, the new taxes have a negative impact on businesses that exist because their revenue is already down due to the economic crisis,’ he added.

About 40 businesses, or 10 percent of his organisation's membership, had indicated they would go under, Mabuza said, adding the tally could be higher.

The property sector was among the hardest hit as companies discontinued rentals of business premises.

Unemployment in Swaziland is about 40 percent, and 70 percent of the population of about 1 million live in abject poverty.

This blow to the Swazi Government’s hopes of convincing the likes of the African Development Bank and the World Bank it is capable of running an economy and therefore should be granted loans in the region of US$125 million-plus, follows news that some politicians and all civil servants are refusing to take10 percent pay cuts that are also part of the FAR.

Time is running out for the government as it is expected it will not be able to pay civil service salaries in June unless it gets an increase in tax revenue.

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