What exactly is the Swaziland Government going to do with the US$100 million (E1 billion) loan it hopes to get from the African Development Bank (ADB)?
The Swazi House of Assembly has tabled a bill that allows it to seek out the loan and gives some details of the terms and conditions that will be placed on the Swazi people in trying to pay the money back.
But nowhere does the government say how it money will be spent. The best it can come up with is that the billion will be ‘for the provision of a budget support and for matters incidental thereto’. The money will be kept in the consolidated fund. The consolidated fund is in effect the government’s chequebook account and the money will be used as and when the government sees fit.
Since no more detailed plans have been announced we must assume that the billion will not be invested in something that will generate income in the future; instead it will be used to pay off government bills.
The loan is probably intended to keep the government afloat while its so-called Fiscal Adjustment Roadmap (FAR) kicks in. The FAR is a collection of expenditure cutting and revenue gaining measures that are meant to bring Swaziland’s near-dead economy back to life.
But, as the International Monetary Fund (IMF) said earlier this month (May 2011), the Swazi Government has so far failed to meet its own targets to cut spending cuts and collect revenue. And, with public servants adamant they will not accept pay cuts; there is not much hope of much change soon.
So back to the one billion: if (and it’s still a big ‘if’ following the last IMF progress report) the ADB hands over the money, it won’t go very far in Swaziland.
Majozi Sithole, the Swazi Finance Minister, said this month the government salary bill was E323 million per month and ‘about E540 million is needed for the running of ministries’.
By my calculation that means the ADB loan is enough to keep the government running for about four months. Maybe it can stretch out a little longer, but unless the government cuts its expenditure and increases revenue now, it won’t go much further.
The House of Assembly was told on Monday (23 May 2011) that the loan would have to be repaid over 20 years. That’s 20 years of debt for four months’ respite for the government.
We all know this government appointed by King Mswati III, sub-Saharan Africa’s last absolute monarch, is incompetent and will waste any loan it is given. It would be better for the Swazi people if the ADB (and other global financial institutions) turned Swaziland’s loan down and insisted on political reforms as well as financial reforms before it would entertain a revised application.
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