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SENATORS QUESTION US$36M AFDB LOAN

16/03/2022 08:52:00 Khulile Thwala

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MBABANE – Are we digging a bigger hole into debt?

This was a question asked by senators yesterday during a Senate sitting, where Minister of Finance Neal Rijkenberg, tabled the African Development Bank (Support for Economic Recovery and Inclusive Growth Phase 1) Loan Bill no3, 2022. The minister, according to this Bill, is authorised to enter into an agreement with the lender for the purpose of raising a loan not exceeding US$36 million.

Worth noting is that the Bill has been considered and passed by the House of Assembly with amendments. Senators questioned whether the loan would not run roughshod on the economy.
“If we say this loan will simply sustain the budget, can that statement be unpacked as to what it means?” asked Senator Isaac Magagula. Senator Moi Moi Mailable wondered whether this loan would benefit the layman as it seemed as though it would only counter the budget. Senator Tony Tsabedze questioned Minister Rijkenberg on how the E3.8 billion deficit would be financed and whether the loan was part of financing the deficit.

Prince Mshengu stated that it was difficult to understand how the phases of the loans worked, as there was Phase One and Phase Two. In his response, Rijkenberg said the US$75 billion consensual funding was there because it was nearly impossible to get this type of funding. He further said the country was now in a healthy place in terms of debt. He said there was a debt bulletin which was now made public in the Eswatini Government website which details how the debt pool of the country was. He said the country needed this loan to supplement the budget.

Princess Ntombiyenkosi also questioned the length of the repayment of the loans, stating that it was worrisome that these loans would be paid over a long period such that the next generation would be expected to repay them. The minister, in his response, said the country had reached a level of having healthy debt, which meant that it was less than the expenditure of capital projects. “There is end in sight in the debt of the country, and we are hoping to turn the corner in a year’s time,” said the minister.

Referred

The Loan Bill was further referred to the committee of the Senate House. When the Appropriation Bill no.3 of 2022 was tabled for debate, Senator Prince Magudvulela stated that it was encouraging to see that money had been used to purchase two aircraft which would be beneficial as it was now rare for countries to not have their own aircraft. “The 15 seater aircraft which recently landed is a sign of a way forward as we will see an increase in trade and production,” he said. He then critiqued the Pay As You Earn (PAYE) tax increase from 33 per cent to 36 per cent, stating that although the salaries of civil servants would be reviewed soon, this was counterproductive.

Senator Sylvia Mthethwa also questioned why the PAYE for high income earners was increased from 33 per cent to 36 per cent. “This tax increase will demoralise educated people because only those who are earning a higher income will be taxed more, and one will start questioning whether getting a high paying job is worth it based on the tax on your income,” she said. The senator said everyone should be taxed accordingly as all citizens were responsible for building the country.

“If we have 60 per cent low income earners and 40 per cent high income earners then a few emaSwati will be contributing to the building of the nation,” said Mthethwa.
Senator Winile Nxumalo said one of the highlights of the national budget presented by the minister was the budget for factory shells across the country, which would assist the unemployed located in rural areas as it would be easier to access these areas than travelling far and wide to acquire employment. “We have a huge issue with corruption and it’s an enemy of progress in the nation. Are there efforts to ensure that the different ministries are capacitated about this?” questioned the senator during the debate. In his submissions, Senator Moi Moi said the nation needed clarity on what exactly the wage bill was and who regulated it. “International organisations such as the International Monetary Fund (IMF) have consistently been raising concerns over the country’s wage bill for years now yet we do not know how they necessarily measure that the wage bill is high,” said Masilela. He also questioned how the issue of corruption was being addressed, making an example of tender issuing by stating that most of them do not have a fixed amount.

Senator Mkhululi Dlamini said money should be allocated to programmes focusing on how to ensure that people have financial management skills as most of the tension observed across the country was because people did not have sufficient funds. “People are broke, hence they are angry and will take to the streets and make noise over issues because they are not happy with their finances. Are there budgeted for programmes that look at why people have these sort of issues and how people can save their money? If there are no programmes of this nature then the issue of civil servants wanting salary increments will never end,” said the senator.

Increased

He further broke down what he understood by the increase in PAYE tax presented by the minister, stating that the PAYE being increased for high income earners would result in a mere inconvenience on them than if it were applied to low income earners. Senator Tony Sibandze, in his submission, questioned the minister on how he was planning to finance the fiscal deficit. He questioned the tax changes highlighted in the national budget as to when these would be implemented or be operational. “The increase in the PAYE is concerning, especially because government is lacking in service delivery. Therefore, it becomes an issue to accept this increase when it is not evident as to where it then goes,” said Sibandze.

In response, the minister said in terms of the Cost of Living Adjustment (CoLA) it was budgeted for yet it was harder to budget for the salary review because the amount to be reviewed had not been calculated. “We are not aware yet as to how much is needed, and we need to be cognisant that the issue of salary reviews is not unique to this country as the world over there haven’t been salary increases because of effects of the pandemic (COVID-19),” he said. He said they were working hand-in-hand with the Ministry of Public Service to try and accelerate the salary review process. Rijkenberg further said they were hoping to have achieved this in the next four months.

When addressing the issue of the Enhanced Voluntary Early Retirement Scheme (EVERS), the minister said the Ministry of Public Service was identifying services which were not critical in all the government departments. “By doing this exercise, the ministry would then offer them the EVERS package,” said the minister. He said in terms of fundamentals of the country, the nation was doing much better although not in service delivery. “We have become a sustainable country and have managed to get the fundamentals right in order to be able to gain foreign direct investments,” said Rijkenberg. On the issue of PAYE, he said government was simply trying to promote equality and not add more money in its pockets through this project,” said the minister.

He said the Anti-Corruption Commission, Auditor General and Human Rights Commission were organisations responsible for dealing with corruption. “We have put measures in place such as tender contracts being passed through Cabinet in order to evaluate the contract before it is approved. Payments are also no longer being issued without going through Cabinet,” said Rijkenberg.