As the country sets its sights on two more new loan Bills submitted in Parliament, an economist has suggested that government should delay accessing fresh borrowing.
University of Eswatini (UNESWA) Economics Department Lecturer, Sanele Sibiya, noted that the country was already committed to several large-scale projects. These include the E5.2 billion strategic oil reserve at Phuzumoya, as well as the Siphofaneni–Sithobela–Maloma–Nsoko (MR14) and Maloma–Siphambanweni (MR21) road upgrades funded by the African Development Bank (AfDB).
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He argued that although repayment schedules for some loans would not begin immediately, project implementation needed to be carefully spread out and efficiently managed.
This follows confirmation from Minister of Finance Neal Rijkenberg that Eswatini had fully settled the International Monetary Fund (IMF) loan. The minister further stated that the new loan Bills would ensure that outstanding suppliers are paid, expressing hope that Parliament would pass the loans within the next month to six weeks.
The repayment of the IMF loan comes against the backdrop of longstanding domestic arrears, where many local suppliers, including small businesses, have gone unpaid due to fiscal constraints.
Earlier this year, government secured an E1.73 billion (US$100 million) loan from the World Bank, aimed at stabilising cash flow and ensuring suppliers were paid on time during the current financial year. Two more loan Bills are also in the pipeline:
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E865 million (US$50 million) facility from OPEC
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E821.7 million (US$47.5 million) loan from the AfDB
Sibiya welcomed the IMF loan settlement, saying it was expected to lower the debt-to-GDP ratio from 43.5% to around 40% or less. However, he cautioned that repayment capacity would ultimately depend on sustained economic growth above 5%.
“The new sources of growth will create sustainable jobs so that government can collect taxes and increase revenue. However, we expect him to hold off a bit because what is worrying is that the last time the minister accessed a E2 billion loan from the World Bank, only E600 million was used for the intended purpose of paying suppliers,” said Sibiya.
He stressed that government needed to implement the national budget in full to open space for private sector growth, including the promised creation of 5,000 jobs.
Until such commitments are met, Sibiya argued, it would be difficult to endorse new loans unless all arrears to the private sector are cleared.
He further suggested that government should borrow only for productive purposes, not to cover salaries and arrears.
“The minister should exhaust and absorb the E12 billion loans already accessed, calibrate against implementing what the money was requested for before tabling new loan Bills,” he added.
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