January 17, 2011

International Monetary Fund urged measures in upcoming budget

The International Monetary Fund (IMF) has called for additional measures in the 2011/12 budget to compensate for recent increases in non-priority spending and continued weakness in SACU revenue transfers. The IMF consultation on Swaziland report stated that the IMF team, noting the large financing gap for the 2011/12 fiscal year, encouraged the country’s authorities to mobilise additional domestic financing, while seeking financial assistance from the international community. The report said the team stressed the importance of reining in the public sector wage bill while protecting needed social programmes. “They noted that a sharp decline in revenue transfers from the Southern African Customs Union (SACU) and excessive growth in the public sector wage bill have set the stage for a fiscal crisis which threatens external stability and the soundness of the financial sector. The immediate policy challenges are to restore a sustainable fiscal position, regain competitiveness, and strengthen financial sector supervision.

The team welcomed the authorities’ plans on all these fronts, but emphasised the need for more ambitious and sustained efforts to revitalise Swaziland’s economic performance,” read the report. It said underscoring that fiscal consolidation needs to be sustained over the medium term; the team welcomed the authorities’ intention to reduce the budget deficit to 2% of GDP by 2014/15. However, they considered that achieving this target required bolder fiscal adjustment and budgetary reforms than envisaged in the current plan. (The Swazi Observer)

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