Majozi and central bank attack IMF officials on report

EZULWINI – Finance Minister Majozi Sithole, backed by senior Central Bank managers and other government officials, yesterday tore into the new IMF report on Swaziland – labelling it biased, negative and unrealistic.

International Monetary Fund (IMF) Head of Mission to Swaziland Joannes Mongar-dini and his three-team members sat and listened as the minister told them that the report they had compiled was unacceptable to Swaziland as it painted a bad picture of the kingdom.

This happened at the Sibane Hotel where the IMF Mission to the country presented the report to government, international organisations and the banking sector, among others.

The report, which is part of the IMF’s Article IV Consultation on Swaziland, is titled ‘Restoring Sustainability in a Changing Global Environment: Options for Swaziland’ and will be made public in mid-December.

Presentations on the report by IMF’s Olivier Basdevant, Emily Forrest and Borislava Mircheva depicted a Swaziland that was in economic recession, with negative economic growth, faced with an overvalued currency, an unstable banking sector, a continued decline in reserves and an unfavourable land tenure system.

Mongardini, on the other hand, had also warned of bad times ahead including a looming negative impact on sugar exports, a tourism sector that had declined by between eight and nine percent, low investor confidence, an envisaged decline in SACU receipts and possible repatriation of money from local to South African banks.

"Things don’t look good at the local level. The economy is facing negative growth," Mongardini sounded the alarm.

What irked the minister and the CBS officials was the defense by the IMF team, which said all that was contained in the report were perceptions and hypothetical conclusions.

First to raise concern on the IMF’s analysis was Bhadala Mamba, the Central Bank of Swaziland’s General Manager – Economic Policy Research and Statistics.

"Your paper fails to credit some of the positive developments that have taken place. We are losing each other because we are using different bases to assess the economy. For instance, sugar exports have increased by 10 percent but you fail to capture that. On the land tenure system, we have a multimillion Emalangeni LUSIP project taking place on Swazi Nation Land (SNL). To us the land tenure system is not negative to growth. It’s just a matter of understanding how we operate. The story from this paper doesn’t articulate the deliverables that came with reforms.

 Government is doing a lot to improve the investor climate. You need to paint a balanced picture. The problem we have is that an IMF paper is taken as the gospel truth so you should articulate the positives that have taken place," Mamba said.

Patrick Ndzinisa, the Central Bank’s Manager –Policy Research and Macro Economics, was more concerned with the overvaluation of the Lilangeni.

"I’m surprised that our currency is so overvalued. I was initially shocked when it was overvalued by 26 to 28 per cent but now I’m even more shocked by the overvaluation of 28 to 55 per cent. You have wrongly calculated the overvaluation."

Welcome Nxumalo, who is the bank’s Assistant Economist, said the IMF report had ignored everything that was positive and included only the negative information.

Minister Majozi Sithole was last to speak and made his feelings known: "I concur with you that our reserves need to improve. But I had expected you to acknowledge that the import cover has improved and is getting better with every end of the quarter. What worries me is that you say your report is based on perceptions but if somebody reads this paper and forms an opinion you won’t be here to explain that it was your perception. It doesn’t help us to have such a paper. You are looking for everything that is negative."

The minister added: "Not everything that is bad happens in Swaziland. It is difficult to accept this paper. We need a balanced paper. This one discourages us from improving. We might appear defensive but this report presents us as doomed. You have heard that there is a review of SACU sharing formula and then you concluded that Swaziland will be worse-off. Why do you say so because SACU States leaders have agreed that the new formula will not leave members worse-off? The dark picture being created is not realistic. Let us not pretend Swaziland is so bad.

Your paper has 29 references and only two of them are not IMF. Has it ever occurred to you that the IMF could be wrong sources of information?"

At the end of the minister’s response, the presentation was closed and the IMF’s Mongardini said they would respond through a press statement to be released on Wednesday.

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