## IMF Staff Completes 2023 Article IV Mission to Eswatini

_IMF News, March 10, 2023_

## Source details

**Canonical URL:** [IMF Staff Completes 2023 Article IV Mission to Eswatini](https://www.imf.org/en/news/articles/2023/03/09/pr2366-eswatini-imf-staff-completes-2023-article-iv-mission-to-eswatini)

## Other formats

- [Markdown version](/en/news/articles/2023/03/09/pr2366-eswatini-imf-staff-completes-2023-article-iv-mission-to-eswatini/index.md)
- [Structured JSON version](/en/news/articles/2023/03/09/pr2366-eswatini-imf-staff-completes-2023-article-iv-mission-to-eswatini/index.json)
- [Bundle manifest](/en/news/articles/2023/03/09/pr2366-eswatini-imf-staff-completes-2023-article-iv-mission-to-eswatini/bundle-manifest.json)

## Bibliographic details
- Published: March 10, 2023

---

### Economic performance and key statistics
- Real GDP growth: rebound of 7.9 percent in 2021; stagnated at 0.4 percent in 2022.
- Headline inflation: 5.6 percent at end-2022.
- Government fiscal deficit: projected to widen to 5.4 percent of GDP by end-FY22-23.
- Current account balance: shifted to an estimated deficit of about 1.1 percent of GDP.
- Foreign reserves: declined to $449 million, equivalent to about 2.3 months of import cover.
- Public debt: 45.5 percent of GDP.
- Domestic payment arrears: rose again in 2022 (after a sharp reduction in 2021).
- Nonbank financial institutions (NBFIs): accounted for almost half of total household credit in 2022Q2 and accounting for about 70 percent of total financial system assets.

### Near-term outlook and scenarios
- Real GDP growth projection for 2023: 3.2 percent, supported by agricultural production and manufacturing, and higher government capital spending.
- Inflation projection: expected to stabilize at around 5 percent.
- SACU revenue transfers: expected to roughly double in FY23-24, facilitating a significant reduction in the fiscal deficit and a modest reduction in the ratio of public debt to GDP.
- Risks noted: volatile international commodity prices; tighter global financial conditions; slowing growth in South Africa; other downside risks that could affect the positive near-term outlook.

### Sources of drag and vulnerabilities
- Recent drags on activity in 2022: civil unrest, government payment arrears, slowing growth in South Africa, heavier than normal rainfall, and industrial action on the sugar sector.
- External and fiscal buffer deterioration: foreign exchange reserves below three months of import cover; fiscal and external buffers have fallen, leaving Eswatini less prepared to counter new shocks.
- Sovereign risk assessment: Eswatini’s risk of sovereign debt distress is high.

### Policy recommendations — fiscal sustainability and public finances
- Revise and implement a fiscal adjustment plan linked to a medium-term fiscal framework to guide year-by-year adjustment.
- Combine expenditure measures with revenue measures:
  - Expenditure-focused actions: reduce the public wage bill (noted as high by international standards) and reduce transfers to public enterprises.
  - Revenue-focused actions: continue progress in tax administration and close holes in the tax net.
- Strengthen public financial management and apply more rigorous assessment of public investments.
- Establish and effectively implement the SACU revenue stabilization fund to manage swings in SACU revenue transfers and enhance macroeconomic management.
- Design measures to mitigate the effects of fiscal adjustment on low-income households.

### Policy recommendations — growth, competitiveness, and inclusion
- Facilitate private investment and strengthen competitiveness by:
  - Streamlining licensing requirements and property registration.
  - Establishing a one-stop shop for businesses.
  - Bolstering protection of investor rights (e.g., contract enforcement, property, and investor rights).
  - Enhancing the rule of law and effective operation of the commercial court.
  - Simplifying tax payment procedures.
  - Addressing high electricity and communication costs.
- Address gender-based disparities in access to education, healthcare, financial services, ownership of assets, and the labor market to enable women to participate fully in economic activities and support a shift to private sector–led growth.

### Financial sector assessment and recommendations
- System soundness: the banking system is generally well capitalized and liquid; for most banks nonperforming loans appear to have peaked and are starting to decline.
- Financial sector risks: prolonged macroeconomic imbalances, a volatile global and regional environment, and potential additional shocks warrant continued monitoring and management of financial stability risks.
- NBFI regulatory gap: legislative efforts to update the regulatory framework need to be expedited together with supervision for systemically large NBFIs.

*Source: IMF Press Release No. 23/66 (March 10, 2023).*

---


## References

- [Kingdom of Eswatini and the IMF](http://www.imf.org/external/country/SWZ/index.htm)
- [South Africa and the IMF](http://www.imf.org/external/country/ZAF/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2023/03/09/pr2366-eswatini-imf-staff-completes-2023-article-iv-mission-to-eswatini_