Minister of Finance Neal Rijkenberg tabled a national budget of E36.92 billion, which includes a deficit of E5.02 billion — translating to 4.9% of gross domestic product (GDP).
According to the Budget Speech, the debt-to-GDP ratio is expected to sit at around 47% during the current fiscal year.
Economist Sanele Sibiya said the figures present a serious concern if the country is slow in transforming its economic structure.
However, he noted that if Eswatini manages to grow the economy at an average of six per cent per year, the current debt levels could be absorbed.
He advised that government should seek debt stabilisation in the short to medium term by shifting from infrastructure-led growth to private sector and productivity-led growth — growth that ensures job creation and expands the tax base.
“If the country does not diversify the economy and continues on the trajectory of deficit financing, it is headed for a debt explosion in the next six years,” Sibiya warned.
Sibiya described the budget as pro-growth, noting that in the coming year the economy is likely to expand, potentially growing the tax base alongside it.
Capital expenditure stands at E7.9 billion, approximately 22% of the national budget. However, he suggested that an ideal balance to usher in a sustained growth era above five per cent would require capital spending closer to 30%.
“The eight per cent increase in capital expenditure is a welcomed change. We need to ensure adequate gross capital formation to drive growth. These are investments in long-term sustainability, helping us create the ability to repay debt through contributions to productivity.
“We need more of these and they must go hand in hand with an industrial utilisation and growth plan,” he said.
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At this stage, Sibiya expects the Eswatini Investment Promotion Authority (EIPA) to intensify efforts in attracting investment.
He said the country should identify three mega investors, as directed by Mswati III, to ensure movement toward a more balanced and sustainable growth path.
To sustain current spending levels, he recommended increased foreign direct investment and stronger domestic private sector participation, so that when infrastructure spending slows, the economy can continue expanding through private productivity.
Sibiya also flagged the government wage bill as an area requiring urgent attention.
He acknowledged that the minister indicated efforts were underway to contain it within 30% of the budget. Currently, it stands at 33% and has surpassed revenues from the Southern African Customs Union (SACU).
Compared with domestic revenue, the wage bill accounts for 65.2%.
“We need to reduce this figure to ensure long-term sustainability,” Sibiya added.
