GOVT WANTS E166M LOAN

 LOBAMBA – Once again, government has tabled a finance Bill in Parliament.

This time, the Kingdom of Eswatini wants a loan of US$10 400 000 from the Export-Import Bank of India.
The money is equivalent to E165 564 880 when calculated according to yesterday’s exchange rate.

The Bill for the loan was tabled by the Minister of Finance Neal Rijkenberg at the House of Assembly on Monday and the funds are to be channelled for the construction of a disaster recovery site for the national data centre, which shall be executed by the Royal Science and Technology Park.

Critical

According to Wikipedia, at its simplest, a data centre is a physical facility that organisations use to house their critical applications and data.

Its design is based on a network of computing and storage resources that enable the delivery of shared applications and data.
Data centres are simply centralised locations where computing and networking equipment is concentrated for the purpose of collecting, storing, processing, distributing or allowing access to large amounts of data.
They have existed in one form or another since the advent of computers.

On another note, a disaster recovery (DR) site is a facility an organisation can use to recover and restore its technology infrastructure and operations when its primary data centre becomes unavailable.
According to the Bill, the country shall repay the loan in 40 consecutive semi-annual instalments after a grace period of five years, which shall be calculated from the date of the first advance.

“The borrower shall pay to the lender an interest rate equal to 1.75 per cent per annum on each advance, or as the case maybe, on the outstanding amount of the credit. The borrower shall pay to the lender a one-time management fee at the rate of 0.5 per cent on the amount of the eligible value of each eligible contract on the interest payment date following the date of approval of the contract by the bank,” the Bill provides.

Contract

It is also provided that the country shall pay a commitment fee at a rate of 0.5 per cent per annum on the amount of credit remaining undrawn in respect of each eligible contract.
Despite imposing a ban on capital projects, the country has been in continuous need of international funding to execute a number of projects.

As at end of December 2019, total debt stock stood at E19.2 billion, equivalent to 28.12 per cent of GDP, of which external debt was E7.1 billion, equivalent to 10.38 per cent of GDP; and domestic debt was E12.10 billion equivalent to 17.74 per cent of GDP.

When he presented his Budget Speech last month, Minister Rijkenberg outlined that in the 2019/20 financial year, government signed loan agreements with different external financiers for the financing of infrastructure projects including the Manzini Water Supply and Sanitation project, Manzini Golf Course Interchange project, and the International Convention Centre project.

Domestic

He mentioned that government continued to raise funds from the domestic market for the financing of capital investments and to develop the financial market.
He highlighted that it was important for government to manage public debt prudently in order to ensure that it is within the stipulated threshold of 35 per cent of GDP.

“Therefore, we will continue to exercise restraint when contracting any debt and further adopt more effective fiscal management principles and practices. In this regard, government will be getting technical assistance from the World Bank to develop the Medium Term Debt Strategy (MTDS), which will assist in evaluating the costs, risks and trade-offs associated with alternative financing strategies over the medium term,” the minister emphasised.

The new loan Bill is expected to be debated by Members of Parliament when the House of Assembly sits next week.

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