SOME HIGHS, LOWS IN 2020

MBABANE – The advent of COVID-19 has made 2020 one of the disastrous years in history.
Coronavirus started to rear its ugly head in the country back on March 14 about a month after the presentation of the 2020/21 Budget Estimates by Minister of Finance Neal Rijkenberg.

A partial lockdown was enforced to curtail the spread of the virus and there were disruptions in supply chains on top of massive job losses.

However, the economy slowly opened up after the second quarter but it did little to repair damages to most industries that include tourism and aviation.

However, every cloud has a silver lining.
Below we zoom in on some of the things that stood out this year, especially in the business sector.

HIGHS

COVID-19 SMEs relief, revolving fund: To cushion small businesses from the impact of the virus, a E90 million relief for compliant taxpayers was introduced during the early stages of the lockdown.

It was administered by the Eswatini Revenue Authority (SRA).
Then there is the E45 million revolving fund also targeting micro, small and medium-sized enterprises with an interest of over seven per cent.
It was launched months later. However, the regulations of the fund were released belatedly (more than three months after launch).

Interest rates major cut: To help businesses and individuals in distress, the discount rate was cut to a record low this year.
The first cut was 100 basis points in March 2020 to 5.5 per cent. Similarly, the banks’ prime lending rate was cut by 100 basis points in March this year to nine per cent.

Since the beginning of 2020 to September this year, the Central Bank of Eswatini (CBE) cut interest rates by a cumulative 275 basis points.

Similarly, the liquidity requirement was slashed by 500 basis points to 20 per cent for commercial banks. It was reduced by 400 basis points to 18 per cent for development banks.

Tax returns filing: There was reprieve when the Ministry of Finance in collaboration with the Eswatini Revenue Authority (SRA) announced the extension of returns filing deadlines by three months before penalties kicked in. This was one of the measures implemented to assist taxpayers during the early stages of the COVID-19 period.

Multi-billion Emalangeni recovery plan: In August this year, the country launched a E30 billion post-COVID-19 economic recovery plan that is expected to create about 40 000 jobs.
The plan is structured to be a stimulus package that will push the economy into a much higher level of productivity. It also provides the fiscal space for government to invest in critical public service delivery as outlined in the National Development Plan.
The plan is aimed at reviving the economy through high-impact, private-sector-led projects in tourism, agriculture, infrastructure, wholesale, manufacturing, energy and textile.

Trade information portal: Eswatini is one of few countries boasting a ‘one-stop online shop’ for trade information that benefits mainly exporters and importers.
It is styled the Eswatini Trade Information Portal (ETIP). It was launched towards the end of September this year.
The portal contains more than 430 documents from at least 22 different sources.
They include legal documents, procedures, measures, forms and trade agreements.

Government e-payment system: In July Government and MTN Eswatini announced the launch of an electronic tool for the payment of government services.
The platform made queuing at revenue offices to pay for services that include company registration a thing of the past.  
The service is accessed through MTN Mobile Money (MoMo) through dialling *468#.

LOWS

Increased public debt: An alarming increase in public debt was witnessed during the year under review. Total debt stock for the country stood at E26.0 billion at the end of the past month, an equivalent of 41.3 per cent to gross domestic product (GDP).
This was an increase of 4.1 per cent when compared to E25.0 billion recorded in the previous month.
This was due to an increase in public domestic debt.
Government repeatedly ran to Central Bank for advances.
The debt figures to GDP are way higher than the International Monetary Fund (IMF) 35 per cent threshold.

Technical recession: The country slipped into technical recession after quarter two of 2020. This was due to two successive quarters of negative growth.
The country’s gross domestic product had fallen 1.1 and 7.5 per cent, in quarter one and two, respectively. The working definition of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP).

Central Bank major loss: At the end of the 2019/20 financial year in March this year, the Central Bank of Eswatini (CBE) posted a loss of E177.6 million.
It was a complete shift from the E190.1 million profit registered the previous financial year.
The credit impairment losses were said to be the major contributors to the loss incurred.

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