Media statement on an agreement to provide financial assistance to the Government of the Kingdom of Swaziland, August 3 2011
Swaziland approached the Government of South Africa for financial assistance to alleviate her fiscal crisis.
The decline in SACU revenue of more than 60 per cent, the delay in taking steps to adjust spending to the new environment, and the lack of fiscal and broader public sector reforms are the main causes of the crisis. This has manifested in a budget shortfall that the government of the Kingdom of Swaziland is unable to finance. While the need for fiscal reforms is the primary objective, this has to be anchored by governance reforms.
The Government of South Africa has agreed to provide a conditional guarantee for a loan of R2.4 billion from the South African Reserve Bank (SARB) to the Central Bank of Swaziland (CBS). The repayment of the loan will take the form of a debit order against the SACU account that is held by SARB on behalf of the Government of the Kingdom of Swaziland. The repayment will coincide with the quarterly payment schedule of SACU transfer payments by South Africa in its capacity as the manager of the SACU Common Revenue Pool.
The loan guarantee is premised on four pillars. These are:
- Confidence building measures to be undertaken by the Government of the Kingdom of Swaziland;
- Fiscal and related technical reforms required by the IMF and to be implemented by the Government of the Kingdom of Swaziland;
- Capacity building support to be provided by South Africa; and
- Co-operation in multilateral engagements.
1. Confidence Building Measures