GOVT CANCELS E2BN AFREXIM LOAN

MBABANE – In what will come as a knock on the face for government suppliers, government has cancelled negotiations for the E2 billion loan at African Export-Import Bank.

The loan was to close the financing gap as government announced that it needed about E3.3 billion (USD 207 million) to finance the current national budget, which includes clearing of arrears and COVID-19 response interventions. 

Government currently owes suppliers close to E2 billion and a great percentage of the money would be used to clear these arrears, which have been hanging for the past two years. 

Cancellation

The Ministry of Finance has been engaging the African EXIM Bank in the quest to secure the loan but those negotiations, which have been ongoing for the past few months, have been put on ice. 

There are many contributing factors into the cancellation of the negotiations over the loan which has caused delay in securing the loan hence government allegedly coming to the conclusion of cancelling it. 

It has been reliably gathered that Minister of Finance Neal Rijkenberg broke the news of the cancellation of the loan negotiations with Afrexim Bank to his colleagues in Cabinet last Tuesday. 

The Minister yesterday confirmed the cancellation of the loan which was meant to settle outstanding arrears through a statement shared to this publication. 

Outstanding

“The Ministry of Finance would like to update the nation regarding the AFREXIM (African Export-Import) Bank loan which was meant to settle outstanding arrears. Due to the delay in meeting and finalising the conditions of the loan, government has taken the decision to cancel the loan,” he said. 

The minister said, however, government remained committed to settling all outstanding payments to suppliers and service providers. He shared that to date more than E1 billion of the outstanding arrears have been paid over the past year. 

Commitments

He submitted that the repayment of arrears was an ongoing process and they were continuing to work on limiting all commitments to available cash and this process was guided by an arrears clearance strategy which has been approved by Cabinet. 

“The International Monetary Fund (IMF) loan for budget support has been finalised which will assist in this current year’s budget commitments. The Ministry will continue to settle arrears using Government revenues and savings and we are confident that the accumulation of arrears will be minimised. We value the support we have received from Government suppliers and service providers and appreciate the level of patience and trust displayed by the business community of Eswatini even in these trying times,” he said. 

It is worth mentioning that Rijkenberg, on January 6, 2020, said government was computing data to ascertain the number of suppliers that it was indebted to. 

He had projected that the compilation of the data would be completed by the second week of the month (mid-January). However, feedback from the business community was that not a single supplier had received a cent from government. 

Verification

In the same spirit, government late last year initiated a verification process which was an invitation extended to all entrepreneurs that conducted business with government. It invited them to resubmit their documents and undergo a verification process before they get paid.

At the time, Rijkenberg said, the method required proper scheduling and comprehensive stock taking. 

In the statement calling on the owed suppliers to submit proof of service to government, the Finance minister said all claims would be subjected to verification by the relevant line ministries and the Internal Audit Department before being passed on to treasury. 

However, nothing came out of that exercise.

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