PRIMARY INCOME ACCOUNT’S E6.5BN DEFICIT

MBABANE - A rise in investment income outflows has widened the country’s primary income account deficit in the past year.

Primary income has to do with the net flow of profits, interest and dividends from investments in other countries and net remittance flows from migrant workers. According to the 2020 Economic Review Report from the Central Bank of Eswatini, in 2019, the primary income account recorded a deficit of E6.544 billion. This is a wider deficit from the E4.241 billion shortfall recorded in 2018.

Deficit

The increased deficit in the account was attributed to a rise in investment income outflows, mainly dividend payments by resident companies to shareholders abroad. “Outflows in the year amounted to E8.335 billion, 35.7 per cent higher than outflows for 2018. Inflows, on the other hand, dipped by 5.9 per cent in 2019 to record E1.791 billion,” reads the report. The compensation of employees sub-account is said to have posted a positive net balance of E262.8 million, depicting a 15.5 per cent year-on-year decline. Inflows in the same category increased from E482.3 million to E569.7 million in 2019, with outflows increasing from E171.2 million to E306.9 million in 2019, resulting in a lower surplus in the sub-account.
“Investment income logged a net deficit of E6.556 billion, in the period under review, on account of higher outflows in the year of E7.742 billion from E5.115 billion in the preceding year. These outflows, in 2019, accounted for 11.6 per cent of annual GDP.

Report

“Investment income inflows amounted to E1.187 billion in 2019, 2.7 per cent lower than inflows recorded in 2018. Other primary income recorded a net deficit of E251.7 million in 2019 from a much wider E651.5 million deficit in 2018,” highlighted the report. Other primary income outflows were considerably lower at E285.9 million from E857.6 million in 2018, while inflows in the category were E34.2 million; significantly lower than the E201 million registered in the previous year. Taxes on products and production are the main contributors of outflows in other primary income. 

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