Statement at the Conclusion of an IMF Mission to SwazilandPress Release No. 12/318
September 19, 2012
An International Monetary Fund (IMF) mission led by Mr. Joannes Mongardini visited Swaziland during September 11-19, 2012 at the request of the authorities to assist them in elaborating an updated Fiscal Adjustment Roadmap and to update the risk assessment pertaining to the financial sector. The mission met with the Minister of Finance, Hon. Majozi Sithole; the Governor of the Central Bank of Swaziland, Mr. Martin Dlamini; and other senior officials. It also held fruitful discussions with development partners and representatives of the private sector.
At the end of the mission, Mr. Mongardini issued the following statement:
“The government is in the process of updating its Fiscal Adjustment Roadmap (FAR) to address the fiscal crisis facing Swaziland, now in its third year. The objective of the updated FAR is to propose policies that could help reduce the fiscal deficit to a sustainable level through both revenue and expenditure measures, including a voluntary early retirement scheme. These measures would be complemented by a new Public Finance Management (PFM) law and a PFM action plan aimed at improving budget formulation, fiscal transparency, and government accountability. In welcoming the objectives of the updated FAR, the mission stressed the need to do more to bring government expenditures in line with available financing in the short run, and to create room to repay the large stock of domestic arrears in full this current fiscal year. In addition, the Minister of Finance should be given sole authority over budget design and execution, as discussed in the 2011 Article IV Consultation staff report available on the IMF website.
“As a result of the fiscal crisis, commercial banks as well as Savings and Credit Cooperatives continue to operate in a difficult environment. It is therefore important for the newly-established Financial Services Regulatory Authority (FSRA) to become operational as soon as possible. Once operational, the FSRA should establish an adequate regulatory framework for non-bank financial institutions, and urgently undertake a full review of the financial standing of key institutions. Furthermore, the FSRA, the government, and the central bank should establish a resolution mechanism for financial institutions and consider the introduction of a limited deposit insurance scheme.
“Discussions will continue in the context of the mission for the 2012 Article IV Consultation scheduled for late October 2012. These discussions will provide an opportunity for a full assessment of the economic challenges and macroeconomic vulnerabilities facing Swaziland, and an in-depth discussion of policy options.
“The mission would like to thank the authorities for the frank and constructive discussions.”