RDF BOOST; MPS APPROVE E500M LOAN WITHIN AN HOUR

LOBAMBA - Another day, another loan!

A report for a loan of around E500 million that will facilitate an increase in the Rural Development Fund (RDF) was yesterday tabled and passed by Members of Parliament (MPs) within an hour at the House of Assembly. While this week the focus is on portfolio committee debates of annual reports for the various ministries, MPs showed up for what was termed an extraordinary sitting, which was held between 1pm and 2pm. During the sitting, Finance Portfolio Committee Chairperson MP Marwick Khumalo tabled the Report on the African Development Bank (Support for Economic Recovery and Inclusive Growth Phase 1) Bill No.3 of 2022. In the report, it was stated that the Minister of Finance, Neal Rijkenberg, had informed the portfolio committee that the development objective of the general budget support programme was to accelerate Eswatini’s Post-COVID-19 Recovery Programmes through improved economic governance and investments climate for enhanced social protection and inclusive economic growth.

Programme

It is contained in the report that the programme will support government’s efforts to restore macro-economic stability, strengthen public financial management (PFM) reforms and boost domestic revenue through increased private sector participation, hence improving livelihoods and enhancing socio-economic protection. It is stated that the loan shall be payable over a period of 34 equal and consecutive semi-annual instalments after a grace period of three years. It is provided that the borrower shall pay to the lender a front-end fee equal to one quarter of one per cent (0.25 per cent) of the loan. There shall also be a commitment charge equal to one quarter of one per cent per annum on the undisturbed loan balance, which shall accrue 60 days after the date of the loan agreement. In the report, details of the implications the loan will have on the country’s debt stock were detailed.
It was mentioned that as at the end of December 31, 2021, preliminary debt figures indicated that total public debt stood at E27.76 billion, which was an equivalent of E38.77 per cent of gross domestic product (GDP). The debt stock figures, it was stated, excluded arrears and contingent liabilities.

Equivalent

“Contracting the new loan of USD 36 million equivalent to E540 million at the prevailing exchange rate, will increase the total debt stock to E28.30 billion, which is equivalent to about 39.53 per cent of GDP,” reads the report in part. It was stated that there were six external loans that were fully repaid during the annual year of 2021, which meant that government had done well in its debt obligations, hence the new loan would not add too much pressure on the expenditure when repayments kicked in. Explaining further was Khumalo, who stated that the reason to table the report with urgency was because currently, Parliament was busy with issues of the national budget and allocations. Khumalo said the loan would be the one to fund some of the allocations.

“A portion of the allocations is the one we are talking about. So if it passes, it means that when the financial year starts in April, the money will be available,” he said.
The Lobamba Lomdzala MP highlighted that they did engage extensively with the minister and stakeholders whereby a concern was raised that the country had too many loans.
“The good thing is that the minister assured us in terms of taking loans to finance the budget, the country has turned the corner. He assured that this is one of the last loans that the country will take to finance a budget,” he said. Khumalo said the interest was also low, which was positive for the country. He said the minister had also assured them that the loan was one of the funds that would be used to finance the RDF. “We have told the minister about the concerns raised regarding the RDF. We ended up agreeing that at least E3.5 million for each constituency will do. Even though the minister raised concerns, we reached a consensus,” Khumalo said and this was welcomed with giggles from his colleagues.
Meanwhile, the MPs also passed the Report on the Ministry of Finance Sessional Committee on the Supplementary Appropriation Bill 2022, Bill No.5 of 2022.

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