## IMF Staff Completes 2025 Article IV Mission to The Kingdom of Eswatini _IMF News, August 7, 2025_ ## Source details **Canonical URL:** [IMF Staff Completes 2025 Article IV Mission to The Kingdom of Eswatini](https://www.imf.org/en/news/articles/2025/08/07/pr25277-eswatini-imf-staff-completes-2025-article-iv-mission) ## Other formats - [Markdown version](/en/news/articles/2025/08/07/pr25277-eswatini-imf-staff-completes-2025-article-iv-mission/index.md) - [Structured JSON version](/en/news/articles/2025/08/07/pr25277-eswatini-imf-staff-completes-2025-article-iv-mission/index.json) - [Bundle manifest](/en/news/articles/2025/08/07/pr25277-eswatini-imf-staff-completes-2025-article-iv-mission/bundle-manifest.json) ## Bibliographic details - Published: August 7, 2025 --- ### Mission and context - IMF staff team, led by Ms. Xiangming Li, visited Mbabane from July 24 - August 6, 2025 to conduct discussions for the 2025 Article IV Consultation. - End-of-Mission press release conveys preliminary findings of the mission; staff will prepare a report for the IMF’s Executive Board subject to management approval. ### Growth, inflation, and medium-term outlook - Growth: - 2.8 percent in 2024. - Expected to accelerate to 4.3 percent in 2025 driven by large public and private investment projects. - Projected to gradually ease over the medium term to 2.8 percent, close to the long-term average. - Inflation: - 4.0 percent in 2024. - Expected to moderate to 3.5 percent in 2025 and broadly track South Africa. - Risks: - Heightened global uncertainty. - Potential delays in project execution. ### Fiscal outcomes, consolidation plans, and public debt - FY24/25: - Fiscal deficit widened to 2.3 percent of GDP despite higher SACU revenues. - Structural primary deficit (excluding SACU revenues) widened by 1.1 percent of GDP in FY24/25. - 2025 outlook and financing: - Structural primary deficit will be tightened by 1.8 percent of GDP in the current year. - Overall deficit is projected to increase to 4.7 percent of GDP, compared with 2.3 percent of GDP in FY24/25, because of a large decline in SACU revenue and higher interest payments. - Public debt is projected at 42.9 percent owing in part to the regularization of arrears. - Financing has been relatively expensive, with the spread on government securities reaching as high as 3¾ percentage points above comparable South African instruments. - In July 2025, Eswatini issued 600 million rand in 5-year bonds at the Johannesburg Stock Exchange, at 12.175 percent. - Government increased borrowing from International Financial Institutions (IFIs) to help lower interest expenses and clear arrears. - Medium-term consolidation: - Over the next six years, the government plans to reduce the structural primary deficit by 1.9 percent of GDP. - Public debt-to-GDP ratio projected to stabilize at 42.8 percent by mid-2031. - Consolidation depends critically on containing spending on goods and services, grants, and the wage bill, which requires strong reforms. ### External sector and reserves - External current account: - External current account surplus narrowed to an estimated 1.3 percent of GDP in 2024. - Projected to shift into a deficit in 2025 as SACU revenues decline and imports rise with large-scale investment projects. - Reserves: - Foreign reserves remained below adequacy thresholds in 2024. - IFI disbursements expected to temporarily boost reserves in 2025. ### Monetary policy and financial stability - Policy rate and peg: - On August 1, the Central Bank of Eswatini kept its policy rate at 6.75 percent. - This effectively narrowed the policy rate differential with South Africa to 25 basis points following the policy rate reduction there on July 31. - Given relatively low reserves, eliminating the differential would help safeguard the peg and harmonize the policy rate with the overnight call window rate. - Limiting cash advances to the government to only exceptional circumstances will help stem capital outflows and support the peg. - Financial sector buffers and safeguards: - Buffers in the financial system are adequate, but close monitoring of asset quality should continue. - Passage of key legislation, such as the updated Financial Services Regulatory Authority Act, and finalizing regulations for non-bank financial institutions are essential for safeguarding financial stability. - Operationalizing the deposit insurance scheme and the Emergency Liquidity Assistance facility will further reinforce the financial safety net. ### Structural reforms and policy recommendations - Public financial management (PFM): - Expeditious implementation of ongoing PFM reforms is essential to enhance budget control and improve efficiency. - Priorities include: - Implementing the Integrated Financial Management Information System to improve budget planning and control. - Amending the PFM Act to improve public investment management and to support reforms of public enterprises. - Public service delivery and civil service: - Complete the e-Government initiative, “Government In Your Hand,” to improve efficiency of public service delivery. - Rationalize the civil service to create fiscal space for priority spending. - Private sector development and human capital: - Priorities to raise potential growth: - Close infrastructure gaps. - Streamline regulations. - Reform SOEs. - Expand credit access. - Strengthen governance. - Address skill mismatches through improved technical and vocational training, alongside broader education reforms, to reduce unemployment and inequality. ### Operational notes and closing - The mission thanked the authorities for their cooperation and hospitality. - Statement of IMF staff views: views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. *IMF Staff Completes 2025 Article IV Mission to The Kingdom of Eswatini, August 6, 2025.* --- ## 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/2025/08/07/pr25277-eswatini-imf-staff-completes-2025-article-iv-mission_