February 6, 2012

Central Bank "dumps" government

The Central Bank of Swaziland (CBS) said it would no longer allow government to draw down on its reserves. Governor Martin Dlamini said government had already reached its limit of borrowing as stipulated under the legislation that governed the operations of the CBS. “Under our own Act, we’re restricted to lend money to government not in excess of the last three years’ revenue, so our exposure right now is we’ve already reached the limit,” he said during a retreat hosted by the Bank in collaboration with the Swaziland Editors Forum at Maguga Lodge. The governor was accompanied by all members of the bank’s executive. The idea of the retreat was to give journalists an overview of the bank’s operations. „Government mislead us; it said it borrowed us money to boost our reserves a couple of years ago, so we should lend them the money now that they needed it. We did that in December and government already paid it in January when it received the customs revenue,” he said when fielding questions from journalists.

Government had outstanding loans of E660 million and E150 million with the Central Bank and these have been settled through revenue the country recently received from the Southern African Customs Union (SACU). Meanwhile, Dlamini said government’s continued borrowing from the CBS threatened the level of reserves. He said that was also the reason the International Monetary Fund (IMF) advised it (government) to stop drawing down on the reserves. “As from now onwards, government is not going to borrow any money from us as that will threaten our reserves. We’re not going to continue lending money to government because it has reached its limit for this fiscal year,” he emphasised. Executive Assistant to the Governor Dr Bhadala Mamba explained that any loans extended to government had to be honoured within the same fiscal year. The national fiscal year ends March 31.

Government has been having cash-flow problems in recent times, where it failed to raise money to pay salaries for civil servants. The Central Bank has been of help as it allowed government to dig deeper into the country’s reserves. IMF called for the cutting of the civil service staff pool. This has not happened. The only meaningful strategy was cutting politicians’ salaries by 10%. However, that has had little impact as IMF reiterated the need to cut staff. Civil servants are against salary cuts. (The Swazi Observer)

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