Statement by IMF Staff Mission to SwazilandPress Release No. 07/275
November 26, 2007
The following statement was issued today in Mbabane by Ms. Wipada Soonthornsima, the International Monetary Fund (IMF) mission chief for Swaziland:
"An IMF mission visited Mbabane during November 6-19 to conduct the 2007 Article IV consultation discussions with Swaziland. Meetings were held with the Minister of Finance Sithole, Central Bank Governor Dlamini, senior government officials, and members of the donor community and the private sector.
"The discussions took place against the backdrop of Swaziland's slow economic growth, which has lagged well behind the improved performance seen in most of sub-Saharan Africa in recent years. Growth in 2007 is expected to slow slightly to 2.3 percent from 2.8 percent in 2006 due in large part to a drought and forest fires. Although food prices are slowly returning to more normal levels, inflation is expected to average about 8 percent in 2007. However, rising revenue transfers from the Southern Africa Customs Union (SACU) have enabled the Central Bank of Swaziland to rebuild international reserves.
"The mission discussed reforms to accelerate growth and make progress towards poverty reduction. The team recommended that fiscal policies should take account of the expected decline in SACU transfers—the main source of government revenues—after 2010. Thus the authorities should save some of the current inflows to smooth the transition to lower SACU revenues. The mission also recommended measures to strengthen revenue administration and broaden the tax base. Expenditures should be reoriented toward pro-poor and productive uses, including addressing HIV/AIDS. In this connection, the mission supported the timely implementation of Swaziland's Poverty Reduction Strategy and Action Program (PRSAP) and recommended that the financing of the program be consistent with the public fiscal framework to safeguard macroeconomic stability.
"The mission stressed the importance of improving the environment for private sector activity. Costs of doing business should be reduced, simplifying business licensing requirements and procedures; improving transportation, energy, and telecommunication infrastructures; and increasing land productivity, partly by a land reform strategy. The mission also recommended that the authorities strengthen the supervision of non-bank financial institutions."