Statement by IMF Staff Mission to SwazilandPress Release No. 06/265
November 28, 2006
The following statement was issued today in Mbabane by an International Monetary Fund (IMF) staff mission:
"The IMF mission visited Mbabane during November 16-27 to conduct the 2006 Article IV consultation discussions with Swaziland. It reviewed economic developments and prospects and discussed the authorities' policy intentions. The mission thanks the Swazi authorities and officials for their help in facilitating the discussions and for the frank and cordial exchange of views.
"Economic growth in Swaziland has weakened over the past decade. Real GDP growth in 2006 is estimated at about 2 percent, slightly lower than the 2005 level, reflecting the return of agricultural production to trend, after a drought in 2005; and a pick up in the retail and construction sectors following government salary increases. Inflation is forecast to rise to 5.4 percent by end-year as food prices continue to rise. Despite the depreciation of the rand, the external current account surplus declined from 3.1 percent of GDP in 2005 to an estimated 1.6 ercent in 2006, as export growth slowed in the face of the elimination of textile quotas.
"To improve the near and medium term macroeconomic outlook, the mission recommended a wide range of reforms to accelerate growth, and make progress towards poverty reduction. The mission considered that the key policy challenges facing the Swazi authorities were to restore fiscal sustainability and external competitiveness. They noted that key priorities included: (i) fiscal consolidation with an immediate reduction of the fiscal deficit and, in the medium-term, the size of government operations; (ii) structural reforms of the financial sector to improve the regulatory and supervisory framework; (iii) improved effectiveness of government operations through reorientation of expenditure to priority sectors; and (iv) structural reforms to improve the investment climate and increase Swaziland's competitive advantage.
"The IMF welcomes the authorities commitment to reforms, and stands ready to work with them in the implementation of the above reform strategy and looks forward to continued policy dialogue in the period ahead.
"The IMF advises and assists member countries in implementing economic and financial policies that promote stability, reduce vulnerability to crisis, and encourage sustained growth and high living standards. As such, it is an apolitical institution and does not get involved in predicting election outcomes in any member country. In this context, the mission is concerned that comments of a political nature from recent reports of a UK-based newsletter were incorrectly attributed to the Fund in a local newspaper."