This 2023 Article IV Consultation discusses that Eswatini has shown resilience to multiple economic shocks. While Eswatini has endured the pandemic and successive shocks from international commodity prices, fiscal and external buffers are low. In tandem, shifting from a state-led to a private sector and export-led growth model will be essential to achieve higher and sustained levels of inclusive growth necessary for poverty reduction. Focused efforts to address the underlying causes of recent civil unrest, together with concerted efforts to tackle gaps in governance, are also needed. Potential new shocks to food, fuel, and fertilizer prices and downward pressure on the external position and foreign exchange reserves are also risks. Delays in fiscal consolidation risk continued macroeconomic imbalances. Fiscal adjustment should continue to target a reduction in the public wage bill and transfers to public enterprises, but also a rationalization of Eswatini’s tax expenditure regime. Consolidation will need to be supported by stronger public financial management. Monetary and exchange rate policy should continue to focus on price stability and maintaining adequate reserves to safeguard the peg.
1. Eswatini is at an important juncture as the authorities seek to address long-standing macroeconomic challenges in a shock-prone environment. Low growth and macroeconomic imbalances have been persistent problems. Eswatini has yet to fully recover from the disinvestment that occurred following the lifting of sanctions on South Africa after apartheid ended in the mid-1990s. The contribution of capital to growth has been minimal since 2000, total factor productivity has been in decline, and export competitiveness has fallen (Annex VII). Income per capita has grown by only 1.8 percent per year on average since 2012. Shifting from a state-led to a private sector and export-led growth model is critical to prospects for higher and sustained levels of inclusive growth.1
This technical assistance (TA) mission on Government Finance Statistics (GFS) was conducted during July 6-12, 2022. The main purpose of the mission was to review the progress made by the authorities in implementing previous TA recommendations and provide further support to strengthen the compilation and dissemination of GFS in line with international standards set out in the Government Finance Statistics Manual 2014 (GFSM 2014).