GOVT TO SETTLE ARREARS BY APRIL - PM

 MBABANE – Government suppliers and service providers have been assured that they would have been paid in full by the end of April 2020.

This assurance was given by Prime Minister Ambrose Mandvulo Dlamini during the Editors Forum convened at Sibane Hotel yesterday. The PM acknowledged that government had not been able to meet the earlier pronounced deadline of September to have fully settled its arrears due to a number of issues.

Finance

He said these included securing finance which was eventually granted by African Export-Import Bank, known as AFREXIM Bank, valued at E2 billion. The loan, payable in 20 quarterly equal instalments, has an interest at the rate of three months Johannesburg Inter-Bank Average Rate (JIBAR) for each interest period determined by the lender on the principal amount of the loan withdrawn and outstanding from time to time.  

  
“Following the securing of a loan to settle arrears, we are confident that they would have been paid up by the end of the first quarter of 2020,” Dlamini pledged.  

The PM said government’s efforts to secure a loan for clearing arrears with suppliers had boosted supplier’s confidence in doing business with government.
He mentioned that it was also anticipated to provide financial relief for suppliers and also stimulate economic activity as suppliers would be able to continue their operations without cash-flow constraints.

 “This will increase the credibility of government in terms of delivering on its promises,” added Dlamini.
It should be mentioned that other charges and fees attached to the E2 billion to be utilised for settlement of the government arrears include an additional interest margin charge of four per cent (400 basis points) per annum on the amounts withdrawn and outstanding from time to time.

It was also pointed out that an upfront fee of 1.5 per cent (150 basis points) and an annual management fee of 0.5 per cent would be payable on every anniversary date of the facility agreement.  Against this backdrop, government currently faces a difficult fiscal situation.
A cash deficit for 2019/20 was projected to reach E5.3 billion, after taking into account a carry-over expenditure (domestic arrears) of E1.92 billion from 2016/17.

It has been mentioned that this shortfall excludes E2.07 billion outstanding payments that are sitting with line ministries, yet to be submitted to the Treasury Department.
Finance Minister Neal Rijkenberg has reiterating in various fora that government remains committed to ensuring that the private sector grows.
The minister mentioned that since he assumed office, about a year ago, they had managed to pay up to E1 billion and continued to make payments as and when enough revenue had been collected to pay off some of the debts.   

Soon after assuming office, Rijkenberg said the State ensured that the E21.83 billion budget for the 2018/19 financial year was fully funded to avoid a situation where they would be prompted to delay payments as a result of the lack of funds.

      
 

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