The fiscal crisis in the Kingdom of Swaziland emanating from a decline in revenue from the Southern African Customs Union and one of the largest public wage bills in sub-Saharan Africa has reached a critical stage. Faced with revenue shortfalls associated with slowing economic activity, uncontrolled public spending, and lack of financing, the authorities continued to deplete central bank reserves and accumulate domestic arrears. The authorities have been able to finance only a minimal amount of expenditure, including wages, utilities, and essential transfers.

Abstract

The fiscal crisis in the Kingdom of Swaziland emanating from a decline in revenue from the Southern African Customs Union and one of the largest public wage bills in sub-Saharan Africa has reached a critical stage. Faced with revenue shortfalls associated with slowing economic activity, uncontrolled public spending, and lack of financing, the authorities continued to deplete central bank reserves and accumulate domestic arrears. The authorities have been able to finance only a minimal amount of expenditure, including wages, utilities, and essential transfers.

RELATIONS WITH THE FUND

As of November 30, 2011

Membership Status

Joined: September 22, 1969; Article VIII

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans: None

Latest Financial Arrangements: None

Projected Payments to Fund 1/

(SDR Million; based on existing use of resources and present holdings of SDRs):

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When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative: Not Applicable

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

Exchange Rate Arrangements

The lilangeni (plural: emalangeni) is pegged at parity to the South African rand, which—alongside the lilangeni—is also legal tender. The intervention currency is the U.S. dollar; exchange rates for the U.S. dollar are based on the floating middle rate of the South African rand against the U.S. dollar. The rate on December 1, 2011 was E1 = US$0.12239. Swaziland maintains an exchange restriction subject to Fund approval under Article VIII arising from a 50 percent on the provision for advance payments for the import of certain capital goods.

Article IV Consultation

The last Article IV Consultation was concluded on January 10, 2011. Swaziland is on the standard 12-month Article IV Consultation cycle.

Technical assistance

(2006-present)

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Swaziland Revenue Authority.

Ministry of Finance.

BANK-FUND JOINT MANAGEMENT ACTION PLAN

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Dates are tentative. Years are calendar years

STATISTICAL ISSUES

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Swaziland: Table of Common Indicators Required for Surveillance

(As of December 1, 2011)

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Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means, as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I); and not available (NA).

SOCIAL AND DEMOGRAPHIC INDICATORS

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Sources: International Financial Statistics; World Bank, World Development Indicators, April 2011, UNAIDS, 2010, 2010 Report on the Global Aids Epidemic; and national authorities. Data refer to 2010, unless otherwise indicated.