IMF Staff Country Reports

This 2023 Article IV Consultation discusses that Eswatini has shown resilience to multiple economic shocks. While Eswatini has endured the pandemic and successive shocks from international commodity prices, fiscal and external buffers are low. In tandem, shifting from a state-led to a private sector and export-led growth model will be essential to achieve higher and sustained levels of inclusive growth necessary for poverty reduction. Focused efforts to address the underlying causes of recent civil unrest, together with concerted efforts to tackle gaps in governance, are also needed. Potential new shocks to food, fuel, and fertilizer prices and downward pressure on the external position and foreign exchange reserves are also risks. Delays in fiscal consolidation risk continued macroeconomic imbalances. Fiscal adjustment should continue to target a reduction in the public wage bill and transfers to public enterprises, but also a rationalization of Eswatini’s tax expenditure regime. Consolidation will need to be supported by stronger public financial management. Monetary and exchange rate policy should continue to focus on price stability and maintaining adequate reserves to safeguard the peg.