THE BALANCING ACT

I believe accolades are due to the Finance Ministry and the Government of the Kingdom of Eswatini on tabling a stellar budget for the financial year 2025/26. The budget balances between alleviating the cost of living pressures on the household sector and catalysing the private sector to drive growth.
Also, we note that the budget contains insights on how government will improve on efficiencies internally. In the long-term, an efficient budget will ensure that going forward, more funds will be saved and channelled to the provision of social provisioning.

Demand side

The household sector is set to receive a direct boost and an avenue for alleviating the cost of living pressures at the start of financial year 2025/26. This will be in the form of direct injections into the household disposable income through increases in transfer payments to the elderly and to people with disabilities. Consumption expenditures will receive a boost of E90 246 000 for new scholarship recipients in 2025/26. Transfer payments to the elderly and people with disabilities will receive a boost of E112 168 800. Also, the minister has a budgeted E500 000 000 in lieu of the salary review exercise.

This equates to a direct cash transfer from the fiscal purse to the pockets of emaSwati, of E702 414 800.00. Note that I am only referencing additions to the existing cash transfers because my focus is on the likely sources of growth that this budget might likely create. This is because existing income in circulation does not have much of a bearing on growth since it does not induce new consumption demand, it is new money that will induce demand. The business sector, especially retail sector will benefit from this surge in demand and this will drive growth. We expect that consumption will likely grow by a significant amount more.

Social safety nets

The school feeding programme will receive an injection of E33 000 000 to the school feeding programme, E50 0000 000 for the IDA agriculture youth programme, E40 000 000 for commercialisation of agriculture, E14 000 000 for the hamba ubuye project aimed at improving agricultural output in ENL and in our subsistence agricultural sector. Note that I categorise these as social safety nets as they are crucial to food sovereignty and ensuring that emaSwati are able to meet their nourishment needs.

Furthermore, the rural development fund will receive a boost of E50 000 000 another direct transfer into the pockets of emaSwati. A total of E187 000 000 will go into improving social safety and indirect impacts on emaSwati and further driving growth in the economy. The minister also alluded to an allocation for the construction of houses for emaSwati, this is the first of its kind in the kingdom and it shows that government is prioritising the needs of the people.

It is therefore safe to assume that an additional conservative estimate of E200 million will be injected into the economy. It is these additional injections that will drive growth in 2025/26. Again, I must commend that this is a direct transfer from the fiscal purse into the pockets of emaSwati. In total, over E1 billion in additional cash will be transferred directly from the fiscal purse into the pockets of emaSwati. This is also in the right path towards redistribution of the wealth of the nation.

Capital expenditure

Capital expenditures will benefit from a boost of a little over E2 billion in the financial year 2025/26. Furthermore, investments in capital projects will create 4 950 jobs for emaSwati and when the capital projects are completed, even more emaSwati will be hired. Further we expect this additional E2 billion to capital expenditures to further drive growth in 2025/26. Government should ensure that capital projects are completed within the budgeted time frame and allotted time to avoid cost over-runs.

Growth

One can therefore conservatively place economic growth in 2025 at the range between five per cent and six per cent. We are assured that we will hit the five per cent mark if geopolitical dynamics do not change and there are no supply chain disruptions.

Omissions

I must say I was taken aback to see that the budget does not make provisions for stop gap measures given changes in the United Sates (US) development aid framework. I have always made this point, ‘hope and prayer are not strategies in business and certainly not in running a country’. The nation needs to be taken in confidence and be assured that government will provide essential services when push comes to a shove. I must commend though that an allocation has been set aside for the establishment of a National Public Health Institute. A step in the right direction.

Deficit financing

The public debt to GDP ratio currently seats at 40.4 per cent and I strongly recommend against taking up new debt. I would recommend that the minister draws down fully on the SACU stabilisation fund. This would give a window for deficit financing in the next fiscal year as some of the public debts would have been consolidated and growth in GDP would have translated into tax benefits. We should not only look at public debt through the ration, but rather through the cash flow lens and that is, the GDP must translate to taxes.

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