November 9, 2010

Job cuts to secure international loan

Thousands of public servants in Swaziland are due to lose their jobs in cutbacks as part of a government bid to gain approval from the International Monetary Fund for a loan. But some Swazis would rather see the budget slashed for the country’s autocratic royals. The civil service of the tiny Southern African monarchy comes with a high wage bill, as 50 percent of national spending going towards 35.000 state posts. Retrenching 7,000 civil servants and freezing the salaries of others offer “the only way out of this economic crisis”, said finance minister Majozi Sithole. The government has already halted capital projects such as the construction of the planned multi-million dollar Sikhuphe International Airport.

The country’s economic growth rate halved between 2008 and 2009 from 2.4 percent to 1.2 percent. Foreign direct investment has also declined. “The situation is such that we have to act now,” said Sithole. “We can no longer procrastinate.”

In October the government presented a so-called fiscal road map to the International Monetary Fund (IMF), the World Bank and the African Development Bank (AfDB). It listed retrenchments and privatisation among the strategies that the government will implement to deal with shrinking state revenue. However, these cutbacks will “not include health and education,” Sithole assured economic experts on Nov 8.

The government had already introduced voluntary early exit packages as far back as 2004 to try and reduce the number of civil servants, said Sithole, but “we had a situation where productive staff wanted to take the packages while those stayed who were supposed to leave”.

The IMF will monitor the implementation of the programme for six months before deciding whether to give the go-ahead to the AfDB to commit funds to Swaziland. The government has impressed the IMF on paper but has to be “tested” on implementation. “If this road map is implemented effectively, government will not have to borrow money after 2015,” Joannes Mongardini, IMF team leader to Swaziland, told the same team of economic experts. (IPS)

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