IMF Executive Board Approves US$110.4 Million in Emergency Support to The Kingdom of Eswatini to Address The COVID-19 Pandemic
IMF News, July 29, 2020
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- Published: July 29, 2020
Executive action and financing
- Press Release No. 20/274; dated July 29, 2020.
- The IMF Executive Board approved emergency financial assistance of SDR78.5 million (about US$110.4 million, 100 percent of quota) under the Rapid Financing Instrument (RFI).
- Purpose: to meet urgent balance of payments needs stemming from the COVID-19 pandemic and to catalyze additional financing from other international financial institutions.
Economic context and immediate priorities
- The COVID-19 pandemic has magnified Eswatini’s existing economic and social challenges, leading to:
- a sharp decline in growth;
- large financing needs.
- Pre-pandemic vulnerabilities included:
- subdued growth;
- rising fiscal deficit and public debt;
- declining international reserves;
- elevated unemployment and widespread poverty.
- Immediate priority of the IMF support and authorities’ response:
- support public health;
- support vulnerable groups;
- support businesses.
- Authorities’ actions highlighted:
- a FY20/21 supplementary budget that reprioritizes public spending towards health care and support to vulnerable groups;
- the Central Bank of Eswatini lowered the policy rate, ensured supportive liquidity conditions, and strengthened its liquidity management framework and monitoring and regulatory standards to safeguard financial stability.
Policy recommendations and governance measures
- Transparency and reporting:
- The authorities’ commitment to transparently use and report all emergency spending— including through the publication of pandemic-related spending execution, awarded procurement contracts, and independent audit of such spending— is crucial to ensure that emergency funds are used for their intended purposes.
- Public financial management and procurement:
- Accelerate public financial management (PFM) reforms, including by applying the implementation guidelines for the 2017 PFM law and strengthening public procurement process, to improve fiscal transparency and governance.
- Post-pandemic priorities:
- Steadfast implementation of the authorities’ multi-year fiscal consolidation strategy and structural reform agenda once the pandemic subsides, to ensure debt sustainability and to support a durable and inclusive recovery and stronger governance.
Expected role of IMF support
- The IMF emergency financial support will:
- help address urgent balance of payments needs triggered by the pandemic;
- complement the authorities’ policy response to the pandemic;
- catalyze additional financing from other international financial institutions;
- support post-COVID-19 fiscal consolidation and structural reform plans to ensure economic stability and promote growth that benefits all Emaswati.
IMF statements
- Following the Executive Board’s discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, issued a statement noting:
- “The authorities’ immediate actions to respond to the COVID-19 pandemic have been timely and appropriate.”
- “The FY20/21 supplementary budget reprioritizes public spending towards health care and support to vulnerable groups to mitigate the impact of the crisis on households and businesses.”
- “The Central Bank of Eswatini has also taken timely action. It has lowered the policy rate, ensured supportive liquidity conditions, and strengthened its liquidity management framework and monitoring and regulatory standards to safeguard financial stability.”
- “The authorities’ commitment to transparently use and report all emergency spending— including through the publication of pandemic-related spending execution, awarded procurement contracts, and independent audit of such spending— is crucial to ensure that emergency funds are used for their intended purposes.”
- “Once the pandemic subsides, steadfast implementation of the authorities’ multi-year fiscal consolidation strategy and structural reform agenda will be critical to ensure debt sustainability and to support a durable and inclusive recovery and stronger governance.”
Source: IMF Press Release No. 20/274, July 29, 2020.