Wednesday, February 13, 2019

Swaziland’s national economic recovery plan is nothing but a wish list

The Government of Swaziland / eSwatini is working on a five-year strategic plan to save the kingdom’s economy, but the details recently unofficially circulated on social media show it is no more than a wish-list with little detail of how change can be achieved.

The plan is officially called the Strategic Road Map 2018 – 2023 and version three is currently doing the rounds. Its ‘vision’ is to allow Swaziland to ‘attain first world status by year 2022’. To achieve this the road map sets out a number of ‘short-term interventions’ for economic recovery.

The plan consists only of a list of bullet points. No detail about how the plan is to be implemented is given. Among the wish list are:

  • Increase in taxes by 25 percent;
  • Increase speeding and court fines 100 percent;
  • Increase casino levies by 10 percent;
  • Increase fuel taxes by E1.20;
  • Introduce capital gains tax;
  • Increase ‘company tax’ rates in the banking sector to 30 percent (it also says elsewhere to reduce ‘corporate taxes’ to 12.5 percent);
  • Increase minimum taxable income from E41,001 to E50,001 and introduce a 39 percent marginal tax rate on incomes above E400,000. [It should be noted that it is estimated that seven in ten of Swaziland’s 1.2 million population have incomes less than the equivalent of US$2 per day or about E9,100 a year.]

Swaziland’s economy has been in freefall for years. The 2018 – 2023 road map is not the first of its kind to be produced by Swazi governments. In 2012 the International Monetary Fund (IMF) abandoned its support for the then-government’s Fiscal Adjustment Roadmap (FAR), a plan for recovery that included getting more revenue through taxes and reducing the public sector wage bill.

In 2012 the government owed E1.2 billion to creditors (that figure had grown to E3.1bn about US$230 million in 2018.)

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 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. The government planned to cut 7,000 public servants’ jobs. This it failed to do.

The government did force through 10 percent salary reductions for politicians, but in 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. 

In April 2012 Joannes Mongardini, head of the IMF mission to Swaziland, confirmed that it was no longer working with Swaziland on the programme because the Swazi Government could not come up with ‘a credible reform programme’.

At the state opening of parliament on Friday (8 February 2019), King Mswati III, the absolute monarch of Swaziland, said his government would ‘unveil the entire strategic road map in due course, for the nation to be well versed and be able to monitor its progress continuously’.

Richard Rooney

The Strategic Road Map 2018 – 2023 is available here

Swaziland’s claim to be close to reaching ‘first world’ status far from reality

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