## _cr06109 ## Source details **Canonical URL:** [_cr06109](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06109.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06109.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06109.pdf.json) --- ### Basic data and macroeconomic indicators (highlights) - Area: 17,364 square kilometers - Population (2005): 1,045,000 - Population growth rate (2005): 0 percent - Formal employment (2003): 102,000 - IMF Position (November 30, 2005): - Quota: SDR 50.70 million - Fund holdings of emalangeni: SDR 44.15 million - Holdings of SDRs: SDR 2.48 million - Exchange rate: US$1 = E 6.32 - Selected annual percentage changes and levels: - GDP at constant prices: 2000: 2.6; 2001: 1.6; 2002: 2.9; 2003: 2.4; 2004: 2.1 - GDP per capita at constant prices: 2000: 0.0; 2001: -1.0; 2002: 0.3; 2003: 0.1; 2004: -0.1 - GDP deflator: 2000: 11.6; 2001: 10.8; 2002: 12.6; 2003: 12.1; 2004: 3.4 - CPI (period average): 2000: 7.2; 2001: 7.5; 2002: 11.7; 2003: 7.4; 2004: 3.4 - CPI (end of period): 2000: 6.4; 2001: 10.8; 2002: 11.5; 2003: 4.6; 2004: 3.2 - Unemployment rate (in percent): 2000: 31.3; 2001: 31.3; 2002: 30.0; 2003: 29.0; 2004: 30.0 - Current account balance (in millions of U.S. dollars): 2000: -75.0; 2001: -56.8; 2002: 57.6; 2003: 36.3; 2004: 40.0 - Trade balance (in millions of U.S. dollars): 2000: -31.2; 2001: -22.5; 2002: -0.3; 2003: -0.9; 2004: -13.1 - Exports, f.o.b. (U.S. dollars): 2000: 905.6; 2001: 1,043.3; 2002: 1,031.6; 2003: 1,484.9; 2004: 1,877.9 - Imports, f.o.b. (U.S. dollars): 2000: -1,041.8; 2001: -1,125.1; 2002: -940.8; 2003: -1,442.1; 2004: -1,909.9 - Net official international reserves (in millions of U.S. dollars): 2000: 293; 2001: 228; 2002: 217; 2003: 212; 2004: 258 - Net official reserves (end of period, U.S. dollars): 2000: 292.9; 2001: 228.5; 2002: 216.8; 2003: 211.5; 2004: 257.6 - Savings and investment (percent of GDP): - Gross national savings: 2000: 13.2; 2001: 13.9; 2002: 24.6; 2003: 19.9; 2004: 19.0 - Gross domestic investment: 2000: 18.6; 2001: 18.4; 2002: 19.8; 2003: 18.0; 2004: 17.4 - Central government finance (fiscal year; percent of GDP unless otherwise noted): - Total revenue and grants: 2000: 28.4; 2001: 27.6; 2002: 26.3; 2003: 26.3; 2004: 29.3 - Total expenditure and net lending: 2000: 29.9; 2001: 30.6; 2002: 30.8; 2003: 29.0; 2004: 33.6 - Central government balance (including grants): 2000: -1.4; 2001: -3.1; 2002: -4.5; 2003: -2.7; 2004: -4.3 - Memorandum items (selected): - GDP in current prices (in millions of emalangeni): 2000: 9,638; 2001: 10,846; 2002: 12,560; 2003: 14,422; 2004: 16,262 - Overall balance of payments (in millions of U.S. dollars): 2000: -6; 2001: -56; 2002: -25; 2003: -21; 2004: 45 - Total external debt (in millions of U.S. dollars): 2000: 358; 2001: 288; 2002: 351; 2003: 413; 2004: 571 - Notes: - The fiscal year runs from April 1 to March 31. - Excluding net errors and omissions. - GDP in current prices under review by the CSO; data on indirect taxes used for estimation of GDP may contain errors and are subject to downward revisions. ### Swaziland’s external competitiveness and the CMA (overview) - Structural context: - Swaziland is a small, open, land-locked economy within the CMA and SACU. - No exchange controls among CMA countries; SACU trade free of tariffs and quotas. - SACU joint customs and excise pool provides about half of Swaziland’s fiscal revenues. - Main exports: sugar and sugar-based products, wood pulp and garments. - South Africa absorbs about 60 percent of Swazi exports and provides about 80 percent of the country's imports. - Swaziland faces widespread poverty, food shortages in parts of the country, and a severe HIV/AIDS epidemic. - CMA legal and operational features (selected): - Article 2: small members (Lesotho, Namibia, Swaziland) may issue national currencies; local currencies legal tender only in their countries; the South African rand is legal tender throughout the CMA. The lilangeni is pegged to the rand at par. - Article 3: no restrictions on transfer of funds for current or capital transactions among members. - Article 5: smaller countries’ exchange control regulations must be similar to South Africa’s in all material aspects. - Policy implications for Swaziland: - Peg and parallel circulation with rand imply no independent control of money supply. - Demand for emalangeni depends on public confidence in exchange rate parity. - Monetary base expands/contracts with central bank foreign exchange purchases/sales. - Interest rate movements largely mirror South Africa’s. - Arrangement has characteristics of a currency board, but CBS may acquire domestic assets (no automatic full foreign reserve backing). - Draw downs of government deposits have increased CBS net domestic assets and diminished net international reserves; as of end-September 2005, international reserves covered only 1.1 months of imports. - Given the peg and limited monetary independence, fiscal and structural policies are the main instruments to preserve or improve competitiveness. ### Trade preferences, sectoral implications, and imminent shocks - Trade preferences and market access: - Preferential access to the EU under the Cotonou agreement and to the U.S. under AGOA (since 2000). - Both the EU and the U.S. maintained quotas on sugar imports. - Sugar sector: - Sugar accounts for some 12 percent of Swaziland’s exports; about half of sugar exports go to other SACU countries. - EU preferential access: - Sugar Protocol: 100,000–130,000 tons per year. - Special Preference Sugar (SPS): about 40,000 tons per year. - EU preferential prices are more than three times higher than unprotected sugar markets. - Exports to the EU amount to about one quarter of total sugar exports (including SACU) in volume terms, and 40 percent by value. - Imminent shocks: - Change in the EU Sugar Protocol in 2007 implying a reduction in sugar prices of 36 percent over a 4-year period. - SPS access may expire in 2006. - Garment sector: - AGOA apparel provisions (from 2001) spurred growth via FDI; at peak (early 2004) the sector provided about one quarter of formal employment. - Bulk output: quota-constrained basics sold to high-volume U.S. discount chains. - AGOA’s “third party fabric provision” allowed inputs from non-AGOA members without affecting quota-free U.S. access. - With U.S. import tariffs at more than 15 percent on average and foreign inputs accounting for at least 50 percent of costs, value added in Swaziland effectively protected at a rate of 30 percent or more. - Since textile quotas under the ATC were lifted at the beginning of 2005, low-cost producers (notably China) increased exports; producers in Swaziland reported steep declines in garment exports and unofficial estimates suggest some 15,000 jobs (about half of the sector’s total) have been lost since early 2004. - Additional adverse shocks likely: - AGOA’s “third party fabric provision” scheduled to be phased out in the fall of 2007. - Safeguards imposed by the U.S. and EU in 2005 on garment imports from China (renewable annually) likely to expire by mid-2008; U.S. safeguards limit annual growth of garment imports from China to 7.5 percent. - Multilateral tariff reduction under the Doha round likely to erode tariff-free market advantages. - Protective/regulatory asymmetries: - EU access rules do not contain an equivalent to AGOA’s “third party fabric provision”; garment exports to the EU have been very small. ### Exchange rate developments and competitiveness effects - Exchange rate context: - Lilangeni pegged to rand at par; peg precludes exchange rate movement against South Africa and aligns domestic price movements with South Africa. - Recent movements and impacts: - Between 2002 and 2004, appreciation of the rand combined with U.S. dollar depreciation led to a lilangeni appreciation relative to the dollar: 50 percent in nominal terms and 24 percent in real effective terms. - During 2005, the lilangeni weakened against the U.S. dollar by about 13 percent. - For many Swazi exporters (price takers), the lilangeni’s strong appreciation likely squeezed profit margins. - Share of the U.S. dollar in Swazi exports estimated at 35 percent, with about one third of that amount concerning exports to the U.S. ### Monetary, reserve, and banking dynamics - Central Bank of Swaziland (CBS) and reserves: - CBS converts emalangeni and rand at fixed rate; functions with currency-board-like characteristics though it may hold domestic assets. - Draw downs of government deposits have increased CBS net domestic assets and diminished net international reserves; as of end-September 2005, international reserves covered only 1.1 months of imports. - Monetary survey (selected): - Broad money (end period, in millions of emalangeni): 2001: 2,602.4; 2002: 2,969.0; 2003: 3,278.0; 2004: 3,437.0; Sept. 2005: (Sept. 2005) - Broad money annual change (percent): 2001: 10.7; 2002: 13.1; 2003: 14.1; 2004: 10.4; Sept. 2005 change: 4.9 - Net foreign assets (monetary authorities, in millions): 2001: 1,873.5; 2002: 1,404.7; 2003: 1,450.2; 2004: 1,461.0 (Sept. 2005) - Central Bank selected balances (in millions of emalangeni): - Foreign assets (2004): 1,474; 2005 (Sept.): 1,487; 2005 (Nov.): 1,934 - Government deposits (2004): 978; 2005 (Sept.): 1,041; 2005 (Nov.): 1,549 - Reserve money (2004): 477; 2005 (Sept.): 488; 2005 (Nov.): 493 - Commercial banks (selected, end period, in millions): - Claims on private sector: 2000: 1,308; 2001: 1,384; 2002: 1,770; 2003: 2,328; 2004: 3,013; 2005 (Nov.): 3,533 - Private sector deposits: 2000: 1,862; 2001: 2,086; 2002: 2,357; 2003: 2,664; 2004: 2,946; 2005 (Nov.): 3,119 - Total liquid assets (end period, in millions): 2000: 350; 2001: 390; 2002: 495; 2003: 508; 2004: 561; 2005 (Sept.): 565 ### Wages, productivity, agricultural yields, and investment climate - Wages and productivity: - Minimum wages in manufacturing increased by 17.5 percent during 2002–04. - Nominal wage expressed in US dollars increased by 58 percent during 2002–04 (reflecting lilangeni appreciation). - Garment-sector comparisons (2002): Swazi nominal wages around Asian country levels (except China higher), lower than South Africa, same as Lesotho, exceeded Kenya and Madagascar. - No systematic studies of labor productivity; anecdotal evidence suggests relatively low productivity except in sugar. - Deteriorating social indicators, including increased absenteeism partly due to HIV/AIDS, aggravated low productivity. - Agriculture and food production: - Sugarcane production (volume, thousands of metric tons): 2000/01: 4,442.0; 2001/02: 4,179.0; 2002/03: 4,609.0; 2003/04: 5,046.0; 2004/05 (Proj.): 4,884.0 - Sugarcane yield (metric tons per hectare): 2000/01: 102.0; 2001/02: 95.0; 2002/03: 102.0; 2003/04: 105.0; 2004/05 (Proj.): 98.0 - Maize output per hectare almost halved since 1998/99 due to drought, soil erosion, lack of investment and credit, and HIV/AIDS; resulting in absolute declines in food production and upward price pressures. - Investment climate and governance constraints: - Perceptions of poor governance, corruption, high utility and transport costs, and a relatively burdensome regulatory environment deter investment. - Rule-of-law crisis in 2002/03 resolved; new Constitution effective February 2006 but uncertainty about implementation remains. - Lack of an Investment Code and a Companies Act creates uncertainty. - Swaziland ranks lowest among CMA countries on Transparency International’s Corruption Perception Index. - Utilities and transportation bottlenecks: high utility costs; frequent power outages/surges; many firms use backup generators; telecommunications expensive; inland transport costly and unreliable (example shipping costs: Hong Kong to Durban averaged between 2,500–3,000 rand; Durban to Swaziland inland transport averaged between 7,000–10,000 rand). - Administrative procedures: SIPA (one-stop shop) faces intervening agency actions; approval procedures are time-consuming and lack transparency; customs and inspections time-consuming; perception that incentives favor nonresidents. - Land tenure: handled by various ministries causing delays; no established procedures for purchase of Government Title Deed Land; single women may hold property title; married women may do so only with husband’s consent. ### Key macro-financial indicators and fiscal balances (selected years/estimates) - Real GDP growth slowed to less than 2 percent in 2005. - Gross international reserves declined to 1.1 months of imports at end-September 2005. - GDP at market prices (in millions of emalangeni; Table 1): - 2000: 9,637.6; 2001: 9,792.8; 2002: 10,075.3; 2003: 10,321.7; 2004 (Est.): 10,534.3 - Alternative series (current prices): 2000: 9,637.6; 2001: 10,846.1; 2002: 12,560.0; 2003: 14,422.4; 2004 (Est.): 16,262.3 - Central government finances (in millions of emalangeni): - Total revenue and grants: 2000/01: 2,825.3; 2001/02: 3,111.2; 2002/03: 3,425.9; 2003/04: 3,908.4; 2004/05 (Proj.): 4,841.8 - Total expenditure and net lending: 2000/01: 2,968.3; 2001/02: 3,455.4; 2002/03: 4,018.2; 2003/04: 4,314.0; 2004/05 (Proj.): 5,554.0 - Primary balance (in millions of emalangeni): 2000/01: -79.9; 2001/02: -242.1; 2002/03: -425.0; 2003/04: -231.8; 2004/05 (Proj.): -544.2 - Overall balance (including grants, in millions): 2000/01: -143.0; 2001/02: -344.2; 2002/03: -592.3; 2003/04: -405.6; 2004/05 (Proj.): -712.2 - Government debt (end period, in millions of emalangeni): 2000/01: 2,331.7; 2001/02: 2,785.7; 2002/03: 2,850.1; 2003/04: 2,955.3; 2004/05: 3,101.9 (Composition 2004/05: Foreign 2,461.6; Domestic 640.3) ### External sector, balance of payments, and external debt - Balance of payments (in millions of U.S. dollars, Table 28): - Current account balance: 2000: -74.6; 2001: -56.7; 2002: 58.0; 2003: 36.4; 2004: 40.0 - Trade balance (U.S. dollars): 2000: -136.2; 2001: -81.8; 2002: 90.7; 2003: 42.8; 2004: -32.0 - Net official reserves (end of period, U.S. dollars): 2000: 292.9; 2001: 228.5; 2002: 216.8; 2003: 211.5; 2004: 257.6 - Total external debt (U.S. dollars): 2000: 358.1; 2001: 288.4; 2002: 350.8; 2003: 412.9; 2004: 571.0 - Total external debt/GDP (percent): 2000: 25.8; 2001: 22.9; 2002: 29.4; 2003: 21.7; 2004: 22.6 - Financial account (U.S. dollars, Table 35): - Direct investment (net): 2001: 46.3; 2002: 84.9; 2003: -70.7; 2004: 65.0 - Long-term capital (net): 2001: -231.1; 2002: -94.6; 2003: -45.0; 2004: -45.2 - Short-term capital (net): 2001: 43.9; 2002: -83.9; 2003: 89.1; 2004: -130.2 - Public sector external debt (in millions of U.S. dollars, fiscal years 2000/01–2004/05): - Total public sector external debt (2004/05): 486 (total disbursed outstanding) - Multilateral loans (2004/05): 283 - Bilateral loans (2004/05): 165 - Financial institutions (2004/05): 38 - Public sector external debt service (in millions of emalangeni, fiscal years 2000/01–2004/05): - Total debt service (2004/05): 214.0 (interest 120.0; principal 94.0) ### Trade composition and partners (selected shares) - Total exports, f.o.b. (2003): 1,484,073 (thousands of U.S. dollars) - Exports to South Africa (2003): 932,453 (Share of South Africa: 63 percent of total exports) - Total imports (2003): 1,442,142; Imports from South Africa: 1,282,930 (Share from South Africa: 89 percent) ### Tax system (selected highlights as of December 31, 2005) - Company income tax: - Companies: 30 percent of taxable income. - Companies granted development approval order: 10 percent of taxable income. - Provisional tax: two payments (six months and year-end) with a third payment introduced by the Income Tax (Amendment) Act of 1994 due six months after close of year of assessment. - New businesses in qualifying manufacturing/exporting activities: exemption from normal tax for first five years (subject to tests); Minister of Finance may grant "development approval orders" with concessions. - Deductions and allowances: interest charges, "reasonable" depreciation, 4 percent for buildings used in production, initial allowance 50 percent for qualifying machinery/buildings in first year, training expenditures deductible at 200 percent where gazetted, research expenditures deductible at annual cost or 4 percent of contract value, whichever greater. - Individual income tax (normal tax): - Tax credit: E2400 p.a. - Marginal rates (emalangeni bands): - 0 – 20,000 : 0 (In percent) - 20,000 –30,000 : 12 (In percent) - 30,000 – 45,000 : 20 (In percent) - 45,001 - 60,000 : 25 (In percent) - 60,001 - 75,000 : 30 (In percent) - 75,000 : 33 (In percent) - Final Deduction System (FDS) for employees with income solely from employment introduced by Income Tax (Amendment) Act No. 6 of 1994. - Taxes on nonresidents (selected rates): - Interest to nonresidents: 10 percent. - Dividends to nonresident shareholders: 12½ percent for companies in Botswana, Lesotho, Namibia, and South Africa; 15 percent for others. - Branch profits: 15 percent (12½ percent to specified nearby countries). - Nonresident contractors/services/entertainers/sportsmen: 15 percent (withholding/final tax where specified). - Taxes on royalties and management charges to nonresidents: 15 percent (withheld at source; final tax). - Withholding tax on dividends paid to resident persons: 10 percent (no exemptions). - Sales tax: - 14 percent on imported and locally manufactured/produced goods (with many exemptions). - 25 percent on all kinds of alcoholic beverages (except traditional beer at 14 percent). - 20 percent on locally manufactured tobacco products; 25 percent on imported tobacco products. - Selective excises (examples): - Malt beer 340 ml: E 43.57; - Spirits (average) 750 ml: E 1,184.00; - Cigarettes 20: E 350.80. - Property transfer tax (transfer duty): - 2 percent on first E 40,000 of transferred property value; - 4 percent of any additional E 20,000; - 6 percent on the residual. - Mineral rights tax (selected): - Transfer of mining rights: 27½ percent on first E 20,000 and 37½ percent above E 20,000. - Tax on unexploited rights: E 10 per ha. in each of the first five years, rising to E 50 per ha. thereafter if no exploitation. - Tax on gains from shares in mineral rights: 37½ percent. - Local taxes and user fees (examples): - Property rates in Mbabane and Manzini: 4 percent of land value and 0.5 percent of value of improvements. - Clearance certificates: E37.00; - Admin. fees (residential): E47.00 – E326.00; - Motorcycles annual license: E60.00; - Motor vehicle license fees by weight: e.g., 1-1,000 kg: 70-100 Emalangeni; 8,001-9,000 kg: 555-585 Emalangeni. - Tax clearance certificate requirements (selected): - Required for issue/renewal/transfer of licenses (except motor vehicle renewal), transfer of immovable property or title deed endorsements, registration/deregistration of a company, first registration of motor vehicles, tendering for government/parastatal contracts in excess of E 5,000. ### Institutional/CMA governance and operational notes - CMA commission: one representative from each member country; regular consultations at least once a year; convenes at other times on request. - Article 9: provision for establishment of a tribunal to arbitrate disputes on interpretation/application of the CMA Agreement. - CMA provisions on local asset requirements: - Article 3 prohibits restrictions on transfers except prescribed investment or liquidity requirements for financial institutions. - Swaziland’s minimum local assets to total deposits ratio: 13 percent at present. - South Africa compensates small CMA members for forgone seigniorage using a formula based on two-thirds of the annual yield on the most recently issued long-term South African government stock multiplied by the volume of rand estimated in circulation in the member country. *Italicized final attribution: Central Statistical Office; Central Bank of Swaziland; Ministry of Finance; Swaziland Sugar Association; Department of Labor; Department of Customs and Excise; Geological Survey and Mines Department; World Bank; United Nations; and Fund staff projections as presented in the source content.* ### 1. Gross Domestic Product by Sector of Origin at 2000 Prices, 2000-2004........................ 17 ### 1. Gross Domestic Product by Sector of Origin at 2000 Prices, 2000-2004........................ 17 ### Basic data and macroeconomic indicators - Area: 17,364 square kilometers - Population (2005): 1,045,000 - Population growth rate (2005): 0 percent - Formal employment (2003): 102,000 - IMF Position (November 30, 2005) - Quota: SDR 50.70 million - Fund holdings of emalangeni: SDR 44.15 million - Holdings of SDRs: SDR 2.48 million - Exchange rate: US$1 = E 6.32 - Annual percentage changes and levels (selected) - GDP at constant prices: 2000: 2.6; 2001: 1.6; 2002: 2.9; 2003: 2.4; 2004: 2.1 - GDP per capita at constant prices: 2000: 0.0; 2001: -1.0; 2002: 0.3; 2003: 0.1; 2004: -0.1 - GDP deflator: 2000: 11.6; 2001: 10.8; 2002: 12.6; 2003: 12.1; 2004: 3.4 - CPI (period average): 2000: 7.2; 2001: 7.5; 2002: 11.7; 2003: 7.4; 2004: 3.4 - CPI (end of period): 2000: 6.4; 2001: 10.8; 2002: 11.5; 2003: 4.6; 2004: 3.2 - Unemployment rate (in percent): 2000: 31.3; 2001: 31.3; 2002: 30.0; 2003: 29.0; 2004: 30.0 - Current account balance (in millions of U.S. dollars): 2000: -75.0; 2001: -56.8; 2002: 57.6; 2003: 36.3; 2004: 40.0 - Trade balance (in millions of U.S. dollars): 2000: -31.2; 2001: -22.5; 2002: -0.3; 2003: -0.9; 2004: -13.1 - Exports, f.o.b. 1/: 2000: 3.0; 2001: 48.3; 2002: 16.0; 2003: 3.3; 2004: 2.8 - Imports, f.o.b. 1/: 2000: -6.9; 2001: 33.7; 2002: -9.2; 2003: -9.8; 2004: -2.4 - Nominal effective exchange rate 2/: 2000: -1.9; 2001: -5.1; 2002: 0.1; 2003: 4.4; 2004: 1.3 - Real effective exchange rate 2/: 2000: -1.9; 2001: 1.7; 2002: -0.5; 2003: 11.8; 2004: 1.2 - Broad money: 2000: -6.6; 2001: 10.7; 2002: 13.1; 2003: 14.1; 2004: 10.4 - Prime lending rate (in percent; end of period): 2000: 14.0; 2001: 12.5; 2002: 16.5; 2003: 11.5; 2004: 11.0 - Interest rates on 12-month time deposits (in percent; end of period): 2000: 7.0; 2001: 6.3; 2002: 9.5; 2003: 4.2; 2004: 4.1 - Savings and investment (In percent of GDP) - Gross national savings: 2000: 13.2; 2001: 13.9; 2002: 24.6; 2003: 19.9; 2004: 19.0 - Of which: government: 2000: 4.8; 2001: 5.2; 2002: 3.0; 2003: 3.3; 2004: 3.4 - Gross domestic investment: 2000: 18.6; 2001: 18.4; 2002: 19.8; 2003: 18.0; 2004: 17.4 - Of which: government: 2000: 6.3; 2001: 8.0; 2002: 7.4; 2003: 5.7; 2004: 7.7 - Central government finance (fiscal year) 3/ - Total revenue and grants: 2000: 28.4; 2001: 27.6; 2002: 26.3; 2003: 26.3; 2004: 29.3 - Of which: South African Customs Union (SACU) receipts: 2000: 14.2; 2001: 13.3; 2002: 12.4; 2003: 12.6; 2004: 16.8 - Total expenditure and net lending: 2000: 29.9; 2001: 30.6; 2002: 30.8; 2003: 29.0; 2004: 33.6 - Current expenditure and net lending: 2000: 23.8; 2001: 22.6; 2002: 23.4; 2003: 23.1; 2004: 26.0 - Central government balance (including grants): 2000: -1.4; 2001: -3.1; 2002: -4.5; 2003: -2.7; 2004: -4.3 - Primary balance (including grants): 2000: -0.8; 2001: -2.1; 2002: -3.3; 2003: -1.6; 2004: -3.3 - External sector (percent of GDP) - Current account balance: 2000: -5.4; 2001: -4.5; 2002: 4.8; 2003: 1.9; 2004: 1.6 - Trade balance (merchandise goods): 2000: -9.8; 2001: -6.5; 2002: 7.6; 2003: 2.2; 2004: -1.3 - Capital and financial account balance: 2000: 1.2; 2001: -9.9; 2002: -6.6; 2003: -3.7; 2004: 0.4 - Overall balance 4/: 2000: -0.5; 2001: -4.5; 2002: -2.2; 2003: -2.3; 2004: -0.7 - External debt: 2000: 25.8; 2001: 22.9; 2002: 29.4; 2003: 21.7; 2004: 22.6 - Memorandum items: - GDP in current prices (in millions of emalangeni) 5/: 2000: 9,638; 2001: 10,846; 2002: 12,560; 2003: 14,422; 2004: 16,262 - Overall balance of payments (in millions of U.S. dollars): 2000: -6; 2001: -56; 2002: -25; 2003: -21; 2004: 45 - Net official international reserves (in millions of U.S. dollars): 2000: 293; 2001: 228; 2002: 217; 2003: 212; 2004: 258 - (in months of imports of goods and nonfactor services): 2000: 2.6; 2001: 2.0; 2002: 2.3; 2003: 1.5; 2004: 1.3 - Total external debt (in millions of U.S. dollars): 2000: 358; 2001: 288; 2002: 351; 2003: 413; 2004: 571 - Sources: Swazi authorities. - Notes: - 1/ In U.S. dollars. - 2/ IMF Information Notice System trade-weighted; end of period. - 3/ The fiscal year runs from April 1 to March 31. - 4/ Excluding net errors and omissions. - 5/ Under review by the CSO; data on indirect taxes used for estimation of GDP may contain errors and are subject to downward revisions based on the review. ### Swaziland’s external competitiveness in the context of the Common Monetary Area (CMA) — overview - Context and structural features - Swaziland is a small, open, land-locked economy within the CMA and the South African Customs Union (SACU). - No exchange controls among CMA countries; trade among SACU countries is free of tariffs and quotas. - The SACU joint customs and excise pool provides about half of Swaziland’s fiscal revenues. - Main exports: sugar and sugar-based products, wood pulp and garments. - South Africa absorbs about 60 percent of Swazi exports and provides about 80 percent of the country's imports. - Swaziland is a low middle-income country with widespread poverty, food shortages in parts of the country, and a severe HIV/AIDS epidemic. - Recent economic trends and competitiveness pressures - Except for 2002 (when the garment sector grew rapidly), economic growth has decelerated since the mid-1990s while the external current account has deteriorated. - Foreign direct investment (FDI) declined from an annual average of 7.1 percent of GDP in 1985–93 to 4.7 percent of GDP in 1994–2002 and, after turning negative in 2003, amounted to 2.5 percent of GDP in 2004. - External factors (e.g., South Africa’s democratization since 1994) and domestic factors (e.g., governance issues) have contributed to the slowdown, suggesting a weakening of Swaziland’s external competitiveness. ### CMA objectives, legal framework, and policy implications - CMA objectives (established April 1986, successor to RMA) - Confer advantages of a common monetary area on members. - Provide for sustained economic development of the CMA as a whole. - Encourage advancement of less-developed members. - Afford to all parties equitable benefits from maintenance and development of the CMA. - Key legal and operational features - Article 2: each small member (Lesotho, Namibia, Swaziland) has the right to issue national currencies; local currencies are legal tender in their respective countries only; the South African rand is legal tender throughout the CMA. The lilangeni is pegged to the rand at par. - Article 3: no restrictions can be imposed on transfer of funds for current or capital transactions to or from any member country. - Article 5: smaller countries’ exchange control regulations must be similar, in all material aspects, to those in effect in South Africa. - Policy implications for Swaziland - Peg of lilangeni to rand, parallel circulation of lilangeni and rand, currency convertibility, and regional capital mobility imply Swaziland does not have independent control of its money supply. - Demand for emalangeni depends largely on public confidence in the exchange rate parity due to extensive financial linkages with South Africa. - Swaziland’s monetary base basically expands (or contracts) in line with central bank purchases (or sales) of foreign exchange. - Interest rate movements in Swaziland largely mirror those in South Africa. - Swaziland’s arrangement has certain characteristics of a currency board, but legal differences exist: no prohibition on acquiring domestic assets for the CBS, so all currency is not automatically and fully backed by foreign reserves. - Draw downs of government deposits to finance fiscal deficits have increased CBS net domestic assets and diminished net international reserves; as of end-September 2005, international reserves covered only 1.1 months of imports. - Given the peg and lack of monetary independence, Swaziland must rely on fiscal and structural policy measures to achieve economic goals and preserve or improve external competitiveness. ### Indicators of external competitiveness — trade preferences and sectoral implications - Trade preferences and market access - Swaziland benefits from preferential access to the European Union (EU) under the Cotonou agreement and, since 2000, to the United States (U.S.) under AGOA. - Both the EU and the U.S. have maintained quotas on sugar imports. - Sugar sector - Sugar accounts for some 12 percent of Swaziland’s exports, about half of which is exported to other SACU countries. - Sugar exports to the EU occur under two preferential agreements: - The Sugar Protocol: 100,000–130,000 tons per year. - The Special Preference Sugar (SPS): about 40,000 tons per year. - EU preferential prices are more than three times higher than those in unprotected sugar markets. - Exports to the EU amount to about one quarter of total sugar exports (including SACU) in volume terms, and 40 percent by value. - Imminent shocks: - Change in the EU Sugar Protocol in 2007 implying a reduction in sugar prices of 36 percent over a 4-year period. - SPS access may expire in 2006. - Garment sector - Historically small and mainly catered to the South African market. - AGOA apparel provisions (in force from 2001) spurred growth via FDI, notably from the Far East. - At its peak, in early 2004, the sector provided about one quarter of formal employment. - Bulk of garment output consists of quota-constrained basic items (e.g., trousers and T-shirts) sold to high-volume discount chains in the U.S. - Swaziland’s garment exports benefited from AGOA’s “third party fabric provision” for least-developed countries (LDCs), allowing inputs from non-AGOA members without affecting quota-free access to the U.S. market. - With relevant U.S. import tariffs at more than 15 percent on average and foreign inputs accounting for at least 50 percent of total costs, value added in Swaziland is effectively protected at a rate of 30 percent or more. - Since textile quotas under the ATC were lifted at the beginning of 2005, low-cost producers (notably China) increased exports; producers in Swaziland reported steep declines in garment exports and unofficial estimates suggest some 15,000 jobs (about half of the sector’s total) have been lost since early 2004. - Additional adverse shocks likely: - AGOA’s “third party fabric provision” scheduled to be phased out in the fall of 2007; maintaining tariff-free U.S. access thereafter would require sourcing fiber inputs from AGOA sources, generally more expensive than current (mostly Asian) inputs. - Safeguards imposed by the U.S. and the EU in 2005 on garment imports from China (renewable annually) are likely to expire by mid-2008. In the U.S. case, safeguards limit annual growth of garment imports from China to 7.5 percent. - Multilateral tariff reduction of nonagricultural products under the Doha round is likely to gradually erode the significance of tariff-free market access. - Protective/regulatory asymmetries - Since EU access rules do not contain an equivalent to AGOA’s “third party fabric provision,” garment exports to the EU have been very small. ### Exchange rate developments and competitiveness effects - Exchange rate context - Swaziland’s external competitiveness is strongly influenced by the peg of the lilangeni to the South African rand; this precludes exchange rate movement against South Africa and conditions domestic price movements to be largely similar to South Africa’s. - Recent exchange rate movements and impacts - Between 2002 and 2004, the strength of the rand combined with the depreciation of the U.S. dollar led to a sizable appreciation of the lilangeni relative to the dollar: 50 percent in nominal terms and 24 percent in real effective terms (Figure I.1). - During 2005, the lilangeni weakened against the U.S. dollar by about 13 percent, partly offsetting the earlier appreciation. - Developments in nominal and real effective exchange rates are widely used indicators of overall competitiveness; for many Swazi exporters (price takers), the lilangeni’s strong appreciation likely squeezed profit margins. - The share of the U.S. dollar in Swazi exports is estimated at 35 percent, with about one third of that amount concerning exports to the U.S. Exporters invoicing in rand would still have experienced a profit squeeze because customers would have factored in the lilangeni’s appreciation. - Data and measurement notes - Real effective exchange rates were calculated on the basis of 2002 partner-country trade weights (imports plus exports) and using Swaziland’s CPI. The report notes an alternative methodology using unit labor costs would be more appropriate for cost competitiveness, but data limitations precluded this. ### Monetary and reserve dynamics (CMA-linked implications) - Monetary transmission and reserve effects - The CBS converts emalangeni and rand at the fixed rate and functions with characteristics similar to a currency board, but without legal prohibition on acquiring domestic assets. - Following draw downs of government deposits to finance fiscal deficits, the CBS has recorded increases in its net domestic assets and diminishing net international reserves. - As of end-September 2005, Swaziland’s international reserves covered only 1.1 months of imports. ### Wage costs, productivity, and nonwage costs (introductory notes) - The report frames wage costs, productivity, and nonwage costs as key areas affecting external competitiveness; detailed metrics and sectoral wage comparisons (e.g., figures on garment sector wages for selected countries, minimum wages) are included in the broader data annex and figures. *Prepared by Jacob Gons; source content as provided in the IMF chapter/section.* ### 18. Given the openness of Swaziland’s economy, its external competitiveness is closely ### 18. Given the openness of Swaziland’s economy, its external competitiveness is closely ### Wage trends and external competitiveness - Minimum wages in manufacturing increased by 17.5 percent during 2002–04. - Reflecting the appreciation of the lilangeni, the nominal wage expressed in US dollars increased by 58 percent during 2002–04. - Garment-sector comparisons (2002) indicate Swazi nominal wages were around the level of those in Asian countries, except China, which has a much higher rate; Swazi nominal wages were lower than in South Africa, at the same level as those in Lesotho, and exceeded those of Kenya and Madagascar. ### Labor productivity and social factors - No systematic studies of labor productivity for Swaziland are available; anecdotal evidence suggests productivity is relatively low, except in the sugar sector. - Deteriorating social indicators, including increased absenteeism partly due to the HIV/AIDS pandemic, have aggravated low productivity. ### Agricultural yields and food production - Sugar cane (main crop), mainly grown on privately owned, well-irrigated Title Deed Land (TDL), had output per hectare increase by some 9 percent since 1998/99; the Swazi sugar industry is generally considered efficient and competitive. - Maize (main crop), primarily cultivated on rain-fed communal Swazi Nation Land (SNL), where SNL accounts for 60 percent of Swazi territory, has seen output per hectare almost halve since 1998/99 due to drought, soil erosion, lack of investment and credit, and the effects of the HIV/AIDS pandemic. - Productivity declines in maize and other food staples, and no increase in acreage, have led to absolute declines in food production and upward pressures on prices. ### Investment climate and governance - The investment climate is negatively affected by perceptions of poor governance, corruption, high costs of utilities and transportation, and a relatively burdensome regulatory environment; these factors have tended to outweigh benefits from relatively little government intervention and a low crime rate. - A rule-of-law crisis in 2002/03 concerning a property dispute that negatively affected investor perceptions has been resolved; a new Constitution clarifying individual rights and private property provisions became effective in February 2006, but uncertainty remains about its implementation. - Lack of important legislation, such as an Investment Code and a Companies Act, creates uncertainty. - Swaziland ranks lowest among CMA countries on Transparency International’s Corruption Perception Index (Table I.1); high-ranking government officials have identified corruption as a major policy challenge. - Utilities and transportation are significant bottlenecks: - The cost of utilities is relatively high; power outages and power surges are frequent; many firms use backup generators; telecommunications are expensive and internet service needs improvement. - All utilities are provided by public enterprises that charge relatively high tariffs. - Despite a relatively well-developed road system and proximity to seaports such as Durban and Maputo, transportation is costly and unreliable. - Typical shipping cost examples: the cost of shipping a container from Hong Kong to Durban averaged between 2,500–3,000 rand; from Durban to Swaziland, inland transport averaged between 7,000–10,000 rand. - Administrative procedures are complicated, lack transparency, and suffer from poor coordination among government agencies: - SIPA, the Swaziland Investment Promotion Agency, is officially a one-stop shop but faces intervening actions by other government agencies. - Approval procedures are time-consuming, lack transparency, and sometimes rules and regulations are contradictory. - Existing businesses face time-consuming customs procedures and arbitrary health and sanitary inspections. - Perception persists that available incentives are granted to nonresidents only and do not apply to local entrepreneurs. - Land tenure issues are handled by various ministries, causing delays; no established procedures exist for purchase of Government Title Deed Land. Single women may hold property title; married women may do so only with their husband’s consent. - Tax and fiscal administration features: - Standard corporate tax rate is 30 percent. - The Minister of Finance may designate an enterprise as a Development Enterprise and grant tax concessions reducing the corporate tax rate to 10 percent for ten years and exemption from withholding tax on dividends for ten years. - New businesses are required to pay provisional corporate income tax six months after commencing operations, constituting a heavy financial burden. - In the absence of a tax tribunal, tax disputes are handled with long delays by the judicial courts. ### Key macroeconomic indicators and implications - In 2005, real GDP growth slowed to less than 2 percent. - Gross international reserves declined to 1.1 months of imports at end-September 2005. - As a CMA participant, Swaziland has no control over the exchange rate and does not have an independent monetary policy; effective implementation of prudent fiscal policies and bold structural reform measures is essential to improve external competitiveness. ### Institutional and CMA features relevant to policy - The CMA agreement allows Lesotho, Namibia, and Swaziland the right to issue national currencies; the local currencies are legal tender in their respective countries only, while the South African rand is legal tender throughout the CMA. - Article 3 of the CMA Agreement prohibits restrictions on transfers of funds except for prescribed investment or liquidity requirements for financial institutions; such regulations function as minimum local asset requirements to address concerns that funds generated locally were flowing to South Africa. - Swaziland’s minimum local assets to total deposits ratio is 13 percent at present. - The CMA Agreement provides access for smaller members to South African capital and money markets only through prescribed investments or approved securities. - South Africa compensates the small CMA members for forgone seigniorage based on a formula equal to the product of (i) two-thirds of the annual yield on the most recently issued long-term South African government stock; and (ii) the volume of rand estimated to be in circulation in the member country concerned. *IMF staff report content (section excerpt).* ### 35. To facilitate the implementation of the CMA Agreement, the member countries have ### _cr06109 - 35. To facilitate the implementation of the CMA Agreement, the member countries have ### CMA Agreement governance - A commission established with one representative from each member country (along with advisors, as needed) to hold regular consultations—at least once a year—to reconcile member-country interests on common issues pertaining to monetary and foreign exchange policies. - The commission convenes at other times at the request of a member country. - Article 9 of the CMA Agreement provides for the establishment of a tribunal to arbitrate disputes regarding interpretation or application of the agreement. ### GDP and sectoral output (selected highlights, 2000–2004) - GDP at market prices (Table 1 / Table 2): - 2000: 9,637.6 (in millions of emalangeni) - 2001: 9,792.8 - 2002: 10,075.3 - 2003: 10,321.7 - 2004 (Est.): 10,534.3 - Alternative series (Table 2, current prices): 2000: 9,637.6; 2001: 10,846.1; 2002: 12,560.0; 2003: 14,422.4; 2004 (Est.): 16,262.3 - GDP at factor cost (2000–2004, Table 1): 2000: 6,696.4; 2001: 6,771.4; 2002: 6,972.7; 2003: 7,128.9; 2004 (Est.): 7,249.0 - Sectoral shares of GDP at factor cost (percent of GDP, Table 1): - Agriculture and livestock: 14.7, 13.2, 13.6, 13.9, 13.5 (2000–2004) - Manufacturing: 35.8, 35.8, 35.5, 35.3, 34.9 - Services: 39.7, 40.4, 40.3, 40.4, 40.9 ### Expenditure components and external trade (Table 3, current prices, 2000–2004) - Final consumption expenditure (in millions of emalangeni): - 2000: 9,344.0; 2001: 10,515.1; 2002: 10,107.0; 2003: 11,880.8; 2004 (Est.): 13,975.0 - Private consumption (2004 Est.): 10,552.4 - Government consumption (2004 Est.): 3,422.6 - Capital formation (2004 Est.): 2,831.6 (gross fixed capital formation: 2,831.6; public: 1,572.6; private: 1,259.0) - Balance of trade for goods and nonfactor services (in millions of emalangeni): - 2000: -1,500.3; 2001: -1,665.4; 2002: -33.4; 2003: -48.8; 2004 (Est.): -544.3 - Exports (2004 Est.): 15,223.1 - Imports, f.o.b. (2004 Est.): -15,767.4 ### Agriculture and sugar (Tables 5–6, 2000/01–2004/05) - Sugarcane production (volume, thousands of metric tons): - 2000/01: 4,442.0; 2001/02: 4,179.0; 2002/03: 4,609.0; 2003/04: 5,046.0; 2004/05 (Proj.): 4,884.0 - Sugarcane yield (metric tons per hectare): 2000/01: 102.0; 2001/02: 95.0; 2002/03: 102.0; 2003/04: 105.0; 2004/05 (Proj.): 98.0 - Domestic consumption and local sales of sugar (calendar year, thousands of metric tons): 2000: 255.0; 2001: 296.0; 2002: 281.0; 2003: 332.0; 2004: 311.0 ### Mining and principal exports (Tables 7, 30–32) - Coal production (thousands of metric tons): 2000: 426.3; 2001: 378.0; 2002: 313.0; 2003: 553.4; 2004: 448.7 - Chrysolite asbestos production ceased after 2001 (Table 7 note: "Asbestos mining stopped in 2001"). - Principal merchandise exports by commodity (Table 30, selected): - Sugar (2003): 977 (in millions of U.S. dollars, Table 30 lists sugar 977 for 2000? note: Table formatting shows mixed units across rows—refer to tables for exact cell context) - Wood pulp (volume 2004): 181 (thousands of metric tons); value (emalangeni) 446 (2000) to 446 (2004) - Citrus fruits (volume 2004): 57 (thousands of metric tons) ### Prices, wages, and employment (Tables 10–12) - Consumer price indices (All-groups index, January 1996 = 100; Table 10): - 2001: 154.1 (index); annual percentage change 10.8 - 2005 (Sept., latest available month): 194.5 (index); annual change 5.0 - Minimum wages for general workers (selected, Table 11): - Mbabane and Manzini retail and wholesale monthly retail wage: 833.0 (2001–2003) - Manufacturing and processing weekly: 120.3 (2000), 131.1 (2001–2003) - Labor force and unemployment (Table 4): - Population (in thousands): 2000: 1,029.6; 2001: 1,050.0; 2002: 1,045.0; 2003: 1,045.0 - Labor force (World Bank estimates): 2000: 383.0; 2001: 394.0 - Unemployment rate (in percent): 2000: 31.3; 2001: 31.3; 2002: 30.0; 2003: 29.0 ### Central government finances (Tables 13–19, 2000/01–2004/05) - Total revenue and grants (in millions of emalangeni): - 2000/01: 2,825.3; 2001/02: 3,111.2; 2002/03: 3,425.9; 2003/04: 3,908.4; 2004/05 (Proj.): 4,841.8 - Tax revenue (2004/05): 4,627.8 - SACU receipts (2004/05): 2,772.8 - Nontax revenue (2004/05): 98.0 - Total expenditure and net lending (in millions of emalangeni): - 2000/01: 2,968.3; 2001/02: 3,455.4; 2002/03: 4,018.2; 2003/04: 4,314.0; 2004/05 (Proj.): 5,554.0 - Current expenditure (2004/05): 4,295.0 (wages and salaries: 1,964.0; goods and services: 1,421.0; interest payments: 168.0) - Capital expenditure (2004/05): 1,259.0 - Fiscal balances: - Primary balance (in millions of emalangeni): 2000/01: -79.9; 2001/02: -242.1; 2002/03: -425.0; 2003/04: -231.8; 2004/05 (Proj.): -544.2 - Overall balance (including grants, in millions): 2000/01: -143.0; 2001/02: -344.2; 2002/03: -592.3; 2003/04: -405.6; 2004/05 (Proj.): -712.2 - Overall balance excluding grants (in millions): 2000/01: -255.1; 2001/02: -471.0; 2002/03: -755.4; 2003/04: -543.3; 2004/05 (Proj.): -828.2 - Government debt (end period, in millions of emalangeni): - 2000/01: 2,331.7; 2001/02: 2,785.7; 2002/03: 2,850.1; 2003/04: 2,955.3; 2004/05: 3,101.9 - Composition (2004/05): Foreign 2,461.6; Domestic 640.3 - Central government revenues (Table 14, selected shares): - Total revenue and grants as percent of GDP: 2000/01: 28.4; 2001/02: 27.6; 2002/03: 26.3; 2003/04: 26.3; 2004/05: 29.3 - Tax revenue as percent of GDP (2004/05): 28.0 - SACU receipts as percent of GDP (2004/05): 16.8 - Nontax revenue as percent of GDP (2004/05): 0.6 - Subsidies and transfers to public enterprises (Table 19, 2000/01–2004/05, in millions of emalangeni): - Total subsidies to public enterprises (2004/05): 213.2 - Operating/Transport subsidy (2004/05): 172.5 - Capital subsidy (flow) (2004/05): 40.7 - Total Subsidies (in percent of GDP): 2000/01: 2.7; 2001/02: 3.5; 2002/03: 2.4; 2003/04: 1.3; 2004/05: 1.3 ### Domestic debt instruments and government debt maturity (Table 20) - Outstanding domestic government debt (end of period, in millions of emalangeni): - 2000: 70.0; 2001: 70.0; 2002: 300.0; 2003: 477.7; 2004: 554.0 - Treasury bills (end period, in millions): 2000: 40.0; 2001: 40.0; 2002: 40.0; 2003: 217.7; 2004: 374.0 - Government bonds and stocks (end period, in millions): 2000: 30.0; 2001: 30.0; 2002: 260.0; 2003: 260.0; 2004: 180.0 ### Monetary and financial sector (Tables 21–26) - Monetary survey (Table 21, end-of-year / Sept. 2005): - Broad money (end period, in millions of emalangeni): 2001: 2,602.4; 2002: 2,969.0; 2003: 3,278.0; 2004: 3,437.0 (Sept. 2005) - Broad money annual change (percent): 2001: 10.7; 2002: 13.1; 2003: 14.1; 2004: 10.4; Sept. 2005 change: 4.9 - Net foreign assets (monetary authorities, in millions): 2001: 1,873.5; 2002: 1,404.7; 2003: 1,450.2; 2004: 1,461.0 (Sept. 2005) - Domestic credit (monetary survey, in millions): 2001: -698.7; 2002: 1,595.3; 2003: 2,421.0; 2004: 2,980.0; Sept. 2005 change: 2,980.0 - Central Bank of Swaziland (Table 22, selected balances, end of period, in millions of emalangeni): - Foreign assets (2004): 1,474; 2005 (Sept.): 1,487; 2005 (Nov.): 1,934 - Government deposits (2004): 978; 2005 (Sept.): 1,041; 2005 (Nov.): 1,549 - Capital Investment Fund (CIF) holdings (2001–Nov. 2005): 1,537.4; 1,219.7; 712.9; 666.7; 569.0; 586.0 - Reserve money (2004): 477; 2005 (Sept.): 488; 2005 (Nov.): 493 - Commercial banks (Tables 23–26, selected): - Claims on private sector (end period, in millions): 2000: 1,308; 2001: 1,384; 2002: 1,770; 2003: 2,328; 2004: 3,013; 2005 (Nov.): 3,533 - Private sector deposits (end period, in millions): 2000: 1,862; 2001: 2,086; 2002: 2,357; 2003: 2,664; 2004: 2,946; 2005 (Nov.): 3,119 - Total liquid assets (Table 25, end period, in millions): 2000: 350; 2001: 390; 2002: 495; 2003: 508; 2004: 561; 2005 (Sept.): 565 - Commercial bank loans and advances by category (Table 26, end period, in millions): Total loans 2000: 1,219; 2001: 1,243; 2002: 1,653; 2003: 2,237; 2004: 2,830; 2005 (Sept.): 3,413 - Industry (2005 Sept.): 2,327 - Personal loans (2005 Sept.): 973 ### Interest rates (Table 27, Dec. 2001–Nov. 2005, in percent) - Central Bank of Swaziland discount rate: ranged from 9.5 (2001 Dec.) to 7.0 (2005 Nov.) - Treasury bills, Swaziland (2000–2005): 5.6 (2001), 10.5 (2002), 7.9 (2003), 8.2 (2004), 6.8 (2005 Nov.) - Prime lending rate, Swaziland (selected): 2001 Dec.: 12.5; 2002 Dec.: 16.5; 2003 Dec.: 11.5; 2005 Nov.: 10.5 ### Balance of payments and external sector (Tables 28–35) - Balance of payments (Table 28, in millions of U.S. dollars, 2000–2004): - Current account balance (U.S. dollars): 2000: -74.6; 2001: -56.7; 2002: 58.0; 2003: 36.4; 2004: 40.0 - Trade balance (U.S. dollars): 2004: -32.0 (2000: -136.2; 2001: -81.8; 2002: 90.7; 2003: 42.8) - Exports, f.o.b. (U.S. dollars): 2000: 905.6; 2001: 1,043.3; 2002: 1,031.6; 2003: 1,484.9; 2004: 1,877.9 - Imports, f.o.b. (U.S. dollars): 2000: -1,041.8; 2001: -1,125.1; 2002: -940.8; 2003: -1,442.1; 2004: -1,909.9 - Transfers (net, U.S. dollars): 2000: 107.5; 2001: 34.5; 2002: 63.1; 2003: 46.4; 2004: 92.4 (Official sector mainly SACU receipts) - Net official reserves (end of period, U.S. dollars): 2000: 292.9; 2001: 228.5; 2002: 216.8; 2003: 211.5; 2004: 257.6 - Gross official reserves (end of period, U.S. dollars): 2000: 338.5; 2001: 267.4; 2002: 259.5; 2003: 264.8; 2004: 261.8 - Balance of payments (in millions of emalangeni, Table 29, selected): - Current account balance (emalangeni): 2000: -517.6; 2001: -488.2; 2002: 610.3; 2003: 275.3; 2004: 257.7 - Goods and services balance (emalangeni): 2004: -544.3 - Direct investment (emalangeni, 2004): 64.9 - Total external debt (U.S. dollars, Table 28): 2000: 358.1; 2001: 288.4; 2002: 350.8; 2003: 412.9; 2004: 571.0 - Total external debt/GDP (in percent, Table 28): 2000: 25.8; 2001: 22.9; 2002: 29.4; 2003: 21.7; 2004: 22.6 - Financial account components (Table 35, U.S. dollars, 2001–2004): - Direct investment (net): 2001: 46.3; 2002: 84.9; 2003: -70.7; 2004: 65.0 - Long-term capital (net): 2001: -231.1; 2002: -94.6; 2003: -45.0; 2004: -45.2 - Short-term capital (net): 2001: 43.9; 2002: -83.9; 2003: 89.1; 2004: -130.2 ### External public debt and debt service (Tables 36–37) - Public sector external debt (Table 36, in millions of U.S. dollars, fiscal years 2000/01–2004/05): - Total public sector external debt (2004/05): 486 (total disbursed outstanding) - Multilateral loans (2004/05): 283 - Bilateral loans (2004/05): 165 - Financial institutions (2004/05): 38 - Public sector external debt service (Table 37, in millions of emalangeni, fiscal years 2000/01–2004/05): - Total debt service (2004/05): 214.0 (interest 120.0; principal 94.0) ### Trade composition and partners (Tables 38–39) - Merchandise exports by SITC (2003, Table 38, in thousands of U.S. dollars): - Total exports, f.o.b. (2003): 1,484,073 - Exports to South Africa (2003): 932,453 (Share of South Africa: 63 percent of total exports) - Selected export shares to South Africa (2003): Sugar, mainly raw: 87 percent; Paper products: 97 percent; Textiles and yarns: 67 percent; Machinery and transport equipment: 6 percent - Merchandise imports (2003, Table 39, in thousands of U.S. dollars): - Total imports (2003): 1,442,142; Imports from South Africa: 1,282,930 (Share from South Africa: 89 percent) - High South Africa shares (2003): Live animals 100 percent; Flour, malt, and gluten 96 percent; Fuels (coal and petroleum) 100 percent; Machinery and transport equipment 89 percent *Italicized final attribution: Central Statistical Office; Central Bank of Swaziland; Ministry of Finance; Swaziland Sugar Association; Department of Labor; Department of Customs and Excise; Geological Survey and Mines Department; World Bank; United Nations; and Fund staff projections as presented in the source content.* ### 1. Taxes on net income and ### 1. Taxes on net income and profits ### Taxes on companies (1.1) - Company income tax (normal tax) governed by Income Tax Order, 1975, as amended. - Annual income tax levied on taxable income derived from sources in Swaziland, or deemed to be in Swaziland, by all companies, foreign or domestic, public or private. - Agricultural cooperatives, insurance societies, and public utility companies considered companies for taxation purposes. - Taxable income = gross income (excluding capital receipts, and foreign and exempt income) less allowable deductions (including loss offsets) incurred in the process of production in Swaziland. - Assessment year ends June 30 and tax (less provisional tax payments) is payable annually. - Company tax legislation is integrated with personal income tax legislation; exemptions, deductions, and allowances appropriate for persons may be claimed by companies where appropriate. - For farming companies, net change in livestock and produce held is deemed income (except companies that opted otherwise under previous tax laws) and will be valued at purchase price or current market prices, whichever is lower. ### Company income tax rates and exemptions (1.11) - Exemptions include, inter alia, dividend receipts of companies, receipts and accruals (including those from investments) of life insurance companies, pension benefits or provident funds, and noninvestment profits of societies and associations derived solely through transactions with individual members. - Rates: - (a) Companies: 30 percent of taxable income. - (b) Companies granted development approval order: 10 percent of taxable income. ### Provisional tax (1.11) - Provisional taxation applies to all companies, directors of private companies, and any person whose income, other than remuneration under the PAYE scheme, exceeds E 1,000 per annum. - Provisional tax payments: - (a) on or before the last day of the six months of the year of assessment, one-half of the tax payable on the estimated income for the year; and - (b) on or before the last day of the year of assessment, the total taxes payable on the estimated income for the year less the amount of the previous provisional tax payment. - The estimated income will normally not be less than the taxable income in the preceding year of assessment. - For companies, the year of assessment equals the year in respect of which its financial accounts are drawn up. - Farmers make one payment of provisional tax on or before the end of the year of assessment on the estimated income for the year. - Phasing-in period: introductory "phasing-in" period of five years provided for payment of provisional tax (one-fifth of provisional tax due for 1985/86 payable in that year, with full payments due in 1990/91). - Income Tax (Amendment) Act of 1994: all companies that are provisional taxpayers required, in addition to the two existing payments, to make a third payment for year of assessment due six months after the close of the year of assessment. ### New business and development enterprise provisions (1.11) - New business engaged in a manufacturing industry not already in existence in Swaziland, or from July 1, 1987 any business predominantly engaged in exporting goods from Swaziland, is exempt from normal tax for the first five years unless cumulative taxable income less cumulative local wage bill exceeds 150 percent of the value of the assets, in which case the excess shall be taxed. - Minister of Finance determines whether a business qualifies as new, manufacturing, or predominantly exporting; may declare a business a development enterprise and issue a "development approval order" granting additional tax concessions with cabinet approval. ### Deductions, allowances, special treatments (1.11) - Deductions allowed: expenditures and losses incurred in the production of income (excluding capital expenditures and dividend payments), interest charges, "reasonable" depreciation allowances for plants, and 4 percent for buildings used in production, along with actual expenditures on repairs and maintenance. - Exempt: grants to the University of Swaziland for capital projects (buildings, fittings, furniture) and other items associated with capital assets needed for university development. - Listing fees: direct "listing" fees on the Swaziland Stock Exchange—only one-third of the expense claimable in the year of expense; the balance spread equally in the next two years. - Contributions to pension schemes limited to 20 percent of employee remuneration and annuities (less employees' contribution) up to E 1,750 per employee. - Total contribution by a taxpayer to retirement annuity funds limited to the greatest of: - (a) 15 percent of taxable income accruing to the tax-payer in respect of trade carried on by him, provided such amount shall not exceed E 5,000 per annum; or - (b) E 3,500 less contributions made by the taxpayer to a pension fund; or - (c) E 1,750. - Expenses relating to training of Swazi employees deductible (in effect 200 percent) for taxpayers engaged in an industry gazetted by the Ministry of Finance with approval of the scheme by the Commissioner. - Research expenditures deductible at the rate of annual cost or 4 percent of the total contract value, whichever is greater. - Initial allowances: available for machinery or plants, infrastructural machinery, or facilities (including transmission equipment, and lines and pipes), and for buildings housing such machinery or plants used by the taxpayer for the first time in a manufacturing business at the rate of 50 percent granted in the first year of assessment during which the machinery or plant or building was first used. - Handicraft and cottage industry sector: "approved companies" and "approved export trading houses" permitted additional deductions: - cottage industry: additional amounts of 133 percent in respect of "approved export promotion expenditure"; - approved export trading houses: additional amounts of 150 percent in respect of "approved export promotion expenditure"; - additional expenditure allowance subject to achieving an increase in volume of exports in the subsequent year. - Contributions to national disaster scheme made during the year of assessment are deductible. - Farming: special 100 percent deductions (not exceeding 30 percent of gross income) allowable for specified on-farm expenditures (e.g., irrigation and fencing); where these deductions are made, initial and depreciation allowances are not allowable. ### Casino tax (1.12) - Governed by Casino Tax Act, 1963 (Act No. 56, 1963, as amended). Effective from July 1, 1985, composed of an annual license fee and a levy based on a percentage of gross gaming room takings less winnings paid to patrons. Licensee is liable to normal tax. - Rates and fees: - (a) The annual license fee is E 2,000. - (b) A levy payable on the gross gaming room takings less amounts paid out as winnings: - In respect of the first year of operation of the casino, no levy shall be paid. - In respect of the second, third, fourth, fifth, and sixth years of operation of the casino, a levy of 2.0 percent shall be paid. - In respect of the seventh year and subsequent years of operation, a levy of 4.5 percent shall be paid. ### Individual income tax (normal tax) (1.21) - Governed by Income Tax Order, 1975, as amended. - Payable on income received by or accruing to all persons from sources within Swaziland or deemed to be within Swaziland. Taxable income = gross income (excluding capital receipts and exempt income) less losses and allowable deductions. - Taxable income includes annuities, wages and salaries, rent, investment income, and benefits in kind (e.g., free housing). - With effect from July 1, 1991, both men and women subject to a uniform system of taxation. - Employees subject to a monthly withholding at source; other taxpayers are assessed annually. - Nonresidents liable for income tax on income earned in Swaziland (including benefits in kind); dividends and interest payments subject to special taxes (see 1.31 and 1.32). - For farmers, net change in produce and livestock held is deemed income (except for those who opted otherwise under previous laws) and valued at the lesser of purchase price or current market price (if purchased), and at standard book valuation otherwise. - Provisional tax system applies to self-employed persons and other individuals whose income, other than remuneration subject to PAYE, exceeds E 1,000 per annum. - Exemptions include every person ordinarily resident in Swaziland whose taxable income in one year of assessment does not exceed E 20,000 per annum, salaries of U.K. and South African civil servants, consular personnel not permanent residents, war pensions and gratuities, the first E 1,000 of interest income from a deposit in a financial institution, interest received by nonresidents from Swaziland government securities and bonds, capital sums due from a provident fund or benefit fund (pension one third of the total value of the annuity to which any employee becomes entitled may be commuted for a single payment), capital sums in commutation of a retirement annuity, gratuities to a maximum of 25 percent of total remuneration in respect of services rendered prior to 1 July 2001, severance allowance or notice pay payable under the Employment Act on termination of services, and the first E 30,000 received by or accrued to an individual on retrenchment or retirement. - Tax credits and rates: - Tax credit: E2400 p.a. - Taxable income marginal tax rates (in emalangeni): - 0 – 20,000 : 0 (In percent) - 20,000 –30,000 : 12 (In percent) - 30,000 – 45,000 : 20 (In percent) - 45,001 - 60,000 : 25 (In percent) - 60,001 - 75,000 : 30 (In percent) - 75,000 : 33 (In percent) - Trust income: 33 percent of taxable income. - Rates of normal tax in the case of a retiring or redundant individual: - Taxable income (in emalangeni) marginal tax rate (In percent) - 30,000 - 60,000 : 12 - 60,001 – 90,000 : 19 - 90,001 – 120,000 : 26 - 120,001 : 33 - Note: Income Tax (Amendment) Order 2003. - Final Deduction System (FDS) introduced by Income Tax (Amendment) Act No. 6 of 1994, effective July 1, 1993: FDS constitutes a final liability to tax related to a full year of assessment. All employees with income solely from employment subject to FDS are not required to furnish an income tax return. ### Individual deductions (1.21) - Deductions include, in addition to those for companies where appropriate, employee contributions to pension funds (maximum E 1,750 where the pension fund is not established by law). - Death, accident, sickness, or unemployment insurance and contributions to provident and benefit funds (other than a medical aid fund) deductible at a rate of 10 percent to a maximum of E 180. To receive this deduction on policies entered after July 1, 1974, the policy must be with the Swaziland Royal Insurance Corporation. ### Graded tax (1.22) - Graded Tax Act of 1968, as amended. - Payable by all persons (apart from exemptions) resident or domiciled in Swaziland; akin to a head tax. Tax determined on the basis of gross income and payable annually (employees have monthly deductions at source). - Exemptions: all persons under the apparent age of 18, women earning less than E 15 per month, visitors, students, and the chronically ill. - Gross income bands and tax payable: - E 0 - E 299 : E 4.20 - E 300 - E 449 : E 6.00 - E 450 - E 600 : E 12.00 - Over E 600 : E 18.00 ### Taxes on nonresidents (1.31–1.36) - Tax on nonresidents' interest receipts (1.31): - Payable by persons not resident in Swaziland or companies not registered in Swaziland on accrued interest where the debtor is domiciled in Swaziland. - Recipient legally liable to pay within 14 days of accrual; normally paid by debtor and deducted from interest remitted. - Exemptions: interest on loans specifically exempt by government (usually government and public body loans); building society shares; interest from loans to agricultural cooperatives and public utilities established by parliament; interest received by church, charitable, or educational organizations; interest amounting to E 20 or less in a full tax year; interest on importers’ bills or notes handled through the banking system. - Rate: Tax is payable at 10 percent of the interest accrued. - Tax on nonresident shareholders (dividends) (1.32): - Payable by persons not resident in Swaziland or companies not registered in Swaziland on dividends received from a company domiciled in Swaziland; payable on interim and final dividends and due within 30 days. - Legal liability resides with recipient; normally paid by payer and deducted from remitted dividends. - Exemptions: dividends paid by agricultural cooperatives; dividends received by church, charitable, or educational institutions; dividends accruing to a nonresident shareholder which the government has exempted in a written undertaking. - Rates: - 12½ percent where dividends payable to a company incorporated (but not a branch of company headquartered in a third country) in Botswana, Lesotho, Namibia, and South Africa. - 15 percent for all other destinations. - Tax on branch profits (1.33): - Payable on the deemed repatriated income of a branch of a nonresident company. - No exemptions. - Rates: - Tax is payable at the rate of 15 percent. - A rate of 12½ percent where repatriated profits are payable to a company incorporated (but not a branch of company headquartered in a third country) in Botswana, Lesotho, Mozambique, Namibia, and South Africa. - Tax on nonresident contractors (1.34): - Payable by every person who makes payment to a nonresident person under an agreement relating to construction operations. Tax is deducted from each payment made to the nonresident. - Nonresident not relieved from obligations to furnish returns; any assessment credited with contractors' tax paid on his behalf. - No exemptions. - Rate: 15 percent. - Tax on nonresident for Swaziland source services contract (1.35): - Payable by all nonresident persons on amounts derived from performance of services that give rise to Swaziland source income. Tax payable on gross amount at source by withholding and is a final tax. - No exemptions. - Rate: 15 percent. - Tax on nonresident entertainers and sportsmen (1.36): - Payable by nonresident entertainers and sportsmen who perform in Swaziland on remuneration or gross receipts of performances received directly by performers; payer required to withhold the tax due from any remuneration payable. - No exemptions. - Rate: 15 percent. *Source: _cr06109 - 1. Taxes on net income and profits (Swaziland: Summary of the Tax System as of December 31, 2005).* ### 1.37 Tax on royalties and ### _cr06109 - 1.37 Tax on royalties and ### Taxes on royalties, management charges, interest, and dividends (sections 1.37–1.39) - 1.37 Tax on royalties and management charge paid to nonresident persons. Income Tax Order, 1975, as amended. - Nature: Payable by nonresident persons on gross amount of any royalty and management charge derived from a source in Swaziland. - Administration: Withheld at source and it is a final tax. - Exemptions: There are no exemptions. - Rate: Tax is payable at the rate of 15 percent. - 1.38 Tax on interest paid to residents. Income Tax Order, 1975, as amended. - Nature: Payable by residents on the gross amount of interest derived from every financial institution. - Administration: Withheld at source. It is a final tax. - Exemptions: There are no exemptions. - Rate: Tax is payable at the rate of 10 percent. - 1.39 Withholding tax on dividends paid to resident persons. - Nature: Tax is payable by a person (other than a company) resident or carrying on business in Swaziland. - Exemptions: There are no exemptions. - Rate: Tax is payable at the rate of 10 percent. ### Tax clearance certificates (section 1.40) - System: A system of tax clearance is in operation. - Current requirements (in terms of a gazette regulation published recently): - Tax clearance is needed for the issue, renewal, or transfer of any license, other than renewal of motor vehicle licenses, or similar document relating to any trade, business, profession, or vocation. - Tax clearance is required for the transfer of immovable property or any endorsement to any title deed having the effect of transferring property. - Tax clearance is required for the registration or deregistration of a company. - Tax clearance is required for first registration of motor vehicles in Swaziland. - Tax clearance is required for tendering for the provision of goods or services to the government or a parastatal body, in excess of E 5,000. ### Social security contributions (section 2) - None. ### Real estate and property taxes (section 3, selected items) - 3.1 Real estate taxes - Reference: See 3.42. - Rate formula: For every E 200 (or part thereof) in dutiable value, the tax rate rises by 0.015 percent. - Maximum: Subject to a maximum tax rate of 33⅓ percent (reached at a dutiable estate value of E 445,667). - 3.2 Tax on unutilized land - Legal basis: Land Tax Order, 1974, King's Order-In-Council No. 35, 1974. - Nature: Levied by a Land Taxation Board on land deemed underdeveloped after a hearing initiated by the Minister of Agriculture (for agricultural land) or the Minister of Local Administration (for urban land). Tax may be levied on all or part of a property owner's land. - 3.3 Death and succession duties - Status: All death and succession duties under the Death Duties Act, 1942, were abolished by the Death Duties (Repeal) Act, 1985. - 3.4 Property transfer tax - 3.41 Transfer duty, Chapter 107 of the Laws, Revised Edition, 1959. - Nature: Duty levied on the sale or long-term lease of fixed property situated in Swaziland. Liable party: the party acquiring title to the property, or entering into a lease of 25 years duration (or longer), or entering into the lease of a claim for mineral rights for any period. - Base: Value of the property being acquired or leased. - Exemptions: Transfers by gift for public, municipal, religious, or charitable uses; government purchases; purchases by public hospitals (for sole use of the hospital); settlement of jointly owned property between married persons upon divorce, or on the death of one party; inter alia. - Rates: - 2 percent on the first E 40,000 of transferred property value - 4 percent of any additional E 20,000 - 6 percent on the residual - 3.42 Mineral rights tax. Mineral Rights Tax, Order No. 34, 1973. - Scope: Holders of mining rights are subject to three distinct taxes grouped together: (a) tax on the transfer of mining rights; (b) ground tax on mineral rights; and (c) capital gains tax on gains from shares in mineral rights. - Exemptions: None. - Rates and specifics: - (a) Transfer of mining rights: taxed at the rate of 27½ per-cent on the first E 20,000 of transferred value and 37½ per-cent above E 20,000. - (b) Tax on unexploited rights: E 10 per ha. in each of the first five years, rising to E 50 per ha. thereafter, if there has been no exploitation. - (c) Tax on gains from shares in mineral rights: 37½ percent of that gain. ### Taxes on goods and services (section 4, selected items) - 4.1 Sales tax. Sales Tax Act (Act. No. 12 of 1983). - Nature: Levied at import and manufacturing levels. Collected on certain services and all goods other than those specifically exempted. Where payable on goods imported from outside the customs union area, valuation is 110 percent of customs value plus customs duties payable. Proceeds paid directly to the Swazi government, and are not paid into the SACU pool. - Exemptions: Many; necessities and intermediate goods for manufacturing mostly exempt along with certain medical supplies, temporary imports, certain personal imports, electricity, etc. - Rates: - 14 percent on imported and locally manufactured or produced goods. - 25 percent on all kinds of alcoholic beverages (imported or locally brewed), except traditional beer. - 14 percent on traditional beer. - 14 percent on accommodation let & food supplied by hotels or restaurants. - 20 percent on locally manufactured tobacco products. - 25 percent on imported tobacco products. - 4.2 Selective excises. Customs and Excise Act (Act No. 21 of 1971). - Nature: Specific duties payable by the importer or manufacturer of beer, tobacco, and cigarettes. Rates set by South Africa, with proceeds pooled under the Customs Union Agreement. - Exemptions: Exported goods. - Example rates (specific): - (1) malt beer 340 ml E 43.57; - (2) Sorghum beer 1 liter E 82; - (3) Spirits (average) 750 ml E 1,184.00; - (4) Sparkling wine 1 liter E 227.60; - (5) Fortified wine 1 liter E 182.50; - (6) Unfortified wine 1 liter E 80.70; - (7) Cigarettes 20 E 350.80; - (8) Pipe tobacco 25 grams E 131.30. - 4.3 Business and professional licenses. Trading Licence Act, 1975. - Nature: Annual license fees charged for betting shops, companies with a place of business in Swaziland, persons or companies trading in Swaziland, and establishments licensed to sell or serve liquor. - Exemptions: None. - Annual fees: - Betting licenses: charged on the basis of annual turnover. - Company license fees: vary from E 20 per annum for companies with a share capital of less than E 10,000 to E 200 per annum for companies with a share capital above E 50,000. - Trading licenses: generally between E 50 and E 5000 per annum (amended schedule, April 2005). - Liquor licenses: between E 25 and E 750 per annum (vary with rural/nonrural area, type of establishment, and type of beverage sold). - 4.4 Motor vehicle taxes. Motor vehicle license fees. Road Traffic Act, 1965. - Nature: License fees levied annually. Rates vary with type and weight of the vehicle. - Exemptions: None. - Annual fees for motor vehicles: - Motorcycles E60.00; - Motorcycles (with sidecar) E 60.00; - Tractors E 60.00; - Tractors (with trailer) E60.00; - Earthmover E 150.00. - Other vehicles (by weight): - Kilograms / Emalangeni: - 1-1,000 70-100 - 1,001-2,000 110-145 - 2,001-3,000 170-220 - 3,001-4,000 235-290 - 4,001-5,000 300-345 - 5,001-6,000 360-405 - 6,001-7,000 420-465 - 7,001-8,000 480-525 - 8,001-9,000 555-585 - 4.5 Fuel oil levy - Components referenced: Fuel tax; Fuel oil levy; Motor Vehicle Accident (MVA) Fund; Sales tax. - Nature: Levy on petroleum products. Exemptions for projects initiated at regional level like Southern African Development Community (SADC). Exemption on fuel used by rail and diplomats and His Majesty and the Indlovukazi (Queen Mother). - Rates and charges: - 40 cents per liter. - 10 cents per liter. - 18 cents per liter. - Customs & excise 4 cents per liter; - Sales tax 14 percent of import parity (changes are usually undertaken anytime deemed necessary). ### Taxes on international trade and transactions (section 5) - 5.1 Duties on imports. Customs Union Agreement, 1969 Legal Notice (No. 71 of 1969) and Customs, Fiscal, Excise, and Sales Duties Act, 1971 (Act No. 21 of 1971). - Nature: Common taxation system on imports with Botswana, Lesotho, Namibia, and South Africa. Import duties levied at point of entry into the common customs area; proceeds pooled and divided among countries according to a formula. Duty rates set by South Africa on the basis of the six-digit Harmonized Commodity Description and Coding System. - Rate structure: Includes general and most-favored-nation clauses. Most duties are ad valorem with specific duties on some items. - Rebates/remissions/refunds: Allowed in some cases (mostly for raw materials and semi-manufactures), must conform to South African rebates. - Range: There are 45 ad valorem rates, ranging from 0 to over 70 percent. - 5.2 Taxes on exports - 5.21 Sugar levy. Sugar Export Levy Act No. 4 of 1997. - Nature: Tax on all sugar exported from Swaziland to the EU. Collected from millers and growers by the Swaziland Sugar Association (SSA), remitted quarterly to the government. - Exemptions: None. - Basis and timing: Levy is on the net ex-mill protocol sales to the European Union to be applied two years in arrears. Net ex-mill export protocol sales proceeds are the Swazi currency equivalent of the gross amount received by the association in respect of all sales of sugar exported, less expenses as prescribed in the act and is payable on a quarterly basis. - 5.22 Cattle export slaughter tax. - Details: Details not available. - Status: No longer enforced, but not yet repealed. ### Other taxes (section 6, selected items) - 6.1 Stamp taxes. Chapter 100 of the Laws, 1959. The Stamp Duties Act, 1970 (Act No. 37) and 1974 (Act No. 13), as amended by the Finance Act of 1985. - Nature: Mostly ad valorem with some specific taxes, payable on a wide range of legal documents (affidavits, bills of exchange, checks, bonds, contract notes, receipts, property transfers, etc.). - Exemptions: Government and specified public enterprises. - Example stamp duties: - Checks carry a 6 percent stamp duty. - Receipts for payments of E 2 or more carry an E 0.10 duty. - Customs bills of entry an E 0.40 duty. - Affidavits, agreements, and contracts an E 1 stamp duty. - 6.2 Miscellaneous licenses. The Registration of Dogs Act, 1953, as amended by the Finance Act, 1985. - Nature: Charged for dog licenses. - Enforcement: None, but the law is not enforced; it has not been repealed. - Dog license tax: E 1 per annum in rural areas and E 3 per annum in urban areas. ### Local taxes and user fees (section B) - Property tax (town councils: Mbabane and Manzini) - Nature: Taxation in the form of rates collected in the two principal towns. Land and improvements taxed at different rates with quinquennial valuation assessments. Changes in tax rates require central government approval. - Exemptions: Government-owned property. - Rates: 4 percent of the land value and 0.5 percent of the value of improvements in both towns. - Urban Government Act 1969 & City Council of Mbabane (Service Charges) By-Laws 2002/03 (selected user fees) - Clearance certificates E37.00; - Admin. fees (residential) E47.00 – E326.00; - Admin. fees (commercial) E93.00 – E1,026.00; - Copies of valuation roll E6.50 – E875.00; - Animal pound E40.00–E75.00; - Parking permit fees E0.16–E 0.27; - Trading license inspection fees: - Category 1 E0.00 - E85.00; - Category 2 E200.00; - Category 3 E600.00; and - Category 4 E600.00. - Other fees: - Abattoir fees E14.00 – E70.00; - Environment monitoring E50.00 – E70.00; - Markets (selected examples): Vegetables A & B E180.00 p.a; Handicraft C E520.00 p.a; Handicraft D E720.00 p.a; - Hire rates for council equipment/plant E80.00 – E250.00; - Recreational facilities fees E3.00 – E200,00; - Cemetery fees E50.00 – E2,500.00; - Refuse removal E10.00 – E210.00; - Septic tanker fees E15.00 – E732.00; - Building fees E0.50 – E1,500.00; - Advertising E440.00 – E3,300.00. *Italicized source attribution: Sources listed in the original table: United Kingdom Board of Internal Revenue, Income Taxes Outside the United Kingdom, Vol. 7 (1972); International Bureau of Fiscal Documentation, Tax System; International Monetary Fund, Surveys of African Economies, Vol. 5; and Swaziland, Government Information Services, A Handbook to the Kingdom of Swaziland, various years, updated by the Swazi authorities.* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr06109.pdf_