Times Of Swaziland: ESWATINI ECONOMY VULNERABLE – MOODY’S

ESWATINI ECONOMY VULNERABLE – MOODY’S
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BY TIMOTHY SIMELANE on 06/03/2019 03:38:00


MANZINI – Eswatini’s over reliance on SACU makes it the most vulnerable
economy within the region, says Moody’s, a giant international credit ratings
agency.
Latest ratings have placed the country at B2 negative, which downgrades the
country, creating a not-so-favourable picture for credit investment.  Namibia is
at Ba1 negative, while Botswana is at A2 stable. South Africa is at Baa3, which
is medium-grade and indicates that the neighbouring State is subject to moderate
credit risk.
Moody’s investor service report issued in February states that Eswatini is
most exposed to the impact of only modest growth in the revenue of the Southern
African Customs Union (SACU).
“Among the four Moody’s-rated sovereigns in the SACU, Eswatini’s fiscal
profile is most vulnerable, given its dependence on SACU revenue as well as its
more limited institutional capacity and policy effectiveness,” said the credit
risk rating agency.
An economist said: “Eswatini still has a clean status when it comes to loan
repayment, However, this can change for the worst if credit ratings such as
those by Moody’s are ignored. If the public debt is over 14 billion, then
surely there is a time when we will fail to make repayment. We need to fix our
current account status,” said the expert.
Funded
He said the country should not have half its budget funded by SACU because
receipts are declining every year. He also said the solution was to empower the
Eswatini Revenue Authority to improve tax collection rate.
Meanwhile, Eswatini’s national development strategy, which expires in 2022,
prioritises increases in infrastructure, agriculture production, and economic
diversification, while aiming to reduce poverty and government spending.
Minister of Finance Neal Rijkenberg  said there was need to exercise caution as
the country continued to acquire more debt through domestic borrowing and
external financing for government projects. He said this required a strong
evaluation of the feasibility prior to implementation.
Meanwhile, when delivering his Speech from the Throne, His Majesty the King said
the fact that Moody’s now rates Eswatini’s economy meant the country had
made a breakthrough towards extending its visibility in the international
financial markets.