Barnabas Dlamini, Swaziland’s illegally-appointed Prime Minister, must explain to the Swazi people why he claimed that the International Monetary Fund (IMF) supported his economic management of the kingdom, when it is now clear it does not.
Yesterday (18 May 2011), after spending 14 days in Swaziland the IMF announced that Swaziland’s so-called Fiscal Adjustment Roadmap – its economic recovery plan – was not working because the Swazi Government had failed to meet targets it set itself.
In a statement, the IMF said, two fiscal targets were missed, ‘on domestic payment arrears, by E 59 million (0.2 percent of GDP)’.
And, ‘The target on the net international reserves of the central bank was also missed by USD 34 million.’
What this means is that the government failed to cut public service salaries by E 240 million,or alternatively to retrench 7,000 public servants to save the money.
Also missed was the government’s commitment to table an important income tax order to parliament by the end of April. This would have allowed it to collect more taxes than at present. The government used money reserves at the Central Bank of Swaziland to pay its bills – and left many simply unpaid.
What all this means is that Swaziland will not have met its own targets by the end of June – the time Dlamini and Majozi Sithole, the Finance Minister, had confidently claimed they would be able to go to the African Development Bank and other international financial institutions for US$125 million-plus loans to pay public service salaries and other commitments during the coming months, to give it time to put the rest of its economic recovery package in place.
Now, the IMF states, it will continue to monitor how the economy is run in Swaziland and will reassess the situation in August 2011.
In summary, the IMF said the government has a ‘severe liquidity’ problem – it doesn’t have money to pay its bills and it should cut expenditure immediately.
‘In this context, the [IMF] mission advised the government to take immediate measures to cut expenditure and mobilize additional financing in order to avoid the accumulation of additional payment arrears, including on wages,’ it said.
‘A large fiscal adjustment is needed to bring the program back on track and reduce the fiscal deficit in line with available financing. The authorities and the mission have identified E 600 million (2 percent of GDP) in spending cuts that could be implemented swiftly to improve the fiscal situation.’
So how was Dlamini able to pass this disaster off as a success? Earlier this month (May 2011), he and Sithole confidently said they had received a ‘letter of comfort’ from the IMF and this would enable them to get loans from international banks.
As I wrote before the so-called comfort letter did not say it supported a loan. This latest revelation that the Swaziland Government is unable to meet its own targets for expenditure cuts and revenue collection should suggest to international banks that it would be a high risk to lend money to Swaziland.
And without the loans, Swaziland will run out of cash. Sithole has already said that it is doubtful if it could meet public sector salary payments in June. He also said that after June things would be easier because of the bank loans.
Those loans are unlikely to be forthcoming in June. So we can expect mass anti-government action.
And as for Prime Minister Dlamini: with his false claims about IMF success, he has shown he can’t be trusted to tell us the truth. The time has come for him to step aside.
‘IMF WANTS 7,000 SWAZI JOB CUTS’