GOVT NOW ON ITS RESERVES
King Mswati III and former SA President Jacob Zuma present Ingwenyama Cup 2019 Campions Young Baffalos their trophy

GOVT NOW ON ITS RESERVES

Minister of Finance Neil Rijkenberg has heeded the call by Central Bank of Eswatini Governor, Majozi Sithole, that government was free to draw from its reserves in mitigation of the current fiscal challenges. The reserves
belong to government, but are in custody of the Central Bank. The minister was speaking during the presentation of his budget for the 2019/20 financial year in the House Assembly last week. “Arrears have accumulated and we continue to draw down on our reserves,” said the minister. He said the economy had stagnated such that government was failing to attract investment as the gap between the rich and poor continued to grow. For too long now, the economic reality has not been addressed, and the minister said now was the time to do so. Regional economic weaknesses, international trade tensions and the lingering impact of the global financial crisis are elements highlighted by the minister to have contributed to the present crisis, but so too have the structural inefficiencies and deficiencies in the economic policy and governance. Rijkenberg said a key component of the crisis was government’s growing Wage Bill, which in the last 10 years had grown by 125 percent. “In contrast, volatile SACU receipts have made government’s fiscal position untenable, in the medium term SACU receipts are expected to decline due to South Africa’s worsening economic position,” he said. He said the country was in trouble because the private sector was too small and its growth too slow. Other worries were that government had not been balancing books and that they had not developed a strong policy framework to address the needs of the public.
He said government had failed to leverage its natural resources, human capital and the public’s strengths. Corruption had not been adequately addressed and the result was that it impacted deep into government coffers, said the minister. The minister said what was needed was a holistic, integrated approach that immediately and radically addressed these structural imbalances and failures – one that required sacrifice, but that ultimately benefitted
every citizen, especially the poorest and most vulnerable. He highlighted the imperativeness of growing the economy, creating jobs, and attracting investment. He said children had to be educated, the sick cared for and provided with social safety for they were the most vulnerable of all the citizens. He added that the country did do not have the luxuries of time and infinite resources and that they must act now and do so with what they
have in their hands. Despite that one of the purposes of reserves is that the country uses foreign exchange reserves to keep the value of their currency at a fixed rate, CBE would have no other option but to dish the reserves out. This would ensure the sustainability of entities like the Eswatini Revenue Authority (ERA), formerly SRA, who as a result of government’s coffers running dry struggles to collect revenue from suppliers owed by government. CBE Governor Majozi Sithole liaised with the relevant ministries including that of finance and curved a way forward with regards to government’s fiscal position. He added that there was a limit of the amount of money that the bank was to release to government and that as a bank they wouldn’t keep the reserves while government had problems with honouring her priorities such as paying salaries and suppliers, including civil servants. As of May 18, 2018, CBE’s reserves stood at E6.5 billion, enough to cover 14 weeks of imported goods and supplies. This policy statement by the bank communicated that Eswatini’s reserves had remained above the internationally recommended three months of imports of goods and services.

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