USE MONEY FOR ECONOMIC GROWTH, EMPLOYMENT - ECONOMIST

MBABANE – While applauding government for the success in the JSE listing, Economist Sanele Sibiya has said that whatever is received, it should be used to promote economic growth and increase employment.

Sibiya said the listing of the bonds came as good news for the country, purely because it meant that funds would be raised in markets something that was to take away the entire concept of bilateral and multilateral lending whereby the interests received were at times higher than the markets would want. “Right now we are facing a situation where you have a bond and support that is market-driven, which is something commendable but at the same time I worry that we are seeing government still tabling loan bills worth billions.  “What I am worried about is that currently we are talking of a debt stock which stands at around 38 per cent so with the list of the bond, it means that we are most likely in a situation where we will exceed the 40 per cent threshold usually advised by international monetary financial institutions,” said Sibiya.

Elaborating, the economist said if government exceeds the threshold, the country might find itself facing a challenge when it comes to repaying its loans. “A bond is one of those things that we pay the interests over time, so it has an element of putting pressure on the fiscus, so you may find that there will be programmes that we will find ourselves not being able to implement effectively.” Also, Sibiya advised that the money should go into areas that will catalyse growth in the economy, so that at least the country can be able to grow its gross domestic product (GDP).

“I would honestly expect the money to go to programmes like clearing areas to the private sector so that it cannot be owed by government, but instead be able to channel that money back to production and grow the GDP of the country.  “I would also expect the money to go into major projects like the proposed strategic oil reserve as such will catalyse the economy. Basically, the money should not go to recurring expenditures,” he said.

Implement

He said he would also advise that government should halt other loans but focus on this bond for now and see how much it is able to raise from it and then start restructuring the country’s debt. Asked to expand, he said a bond was not like any other loan which one was able to pay bit by bit, but that one paid interest and when it matures there was a need to pay all of it.
“So I would suggest that we invest it in areas that will give us growth and create employment so that when the whole E4 billion is wanted, we find ourselves in a situation where we have it. As a country it requires us to rationalise our investments in capital projects,” he emphasised. It should be noted that when the plan by government to apply for the listing, the Swaziland Liberation Movement (SWALIMO) issued a statement opposing it.

The political movement said the country was in no position to service such a loan due to depleted coffers and an ailing economy. In the statement, SWALIMO said the JSE would be putting the country at risk by advancing such a loan. The movement further alleged that the current financial situation in the country at the time was a result of government overspending and failure to prioritise important projects. They stated that the loans were piling up and soon the country was going to go under the hammer for failing to service its debts. They lamented that government was requesting for an advance from the JSC at the backdrop of other loans from the African Development Bank (AfDB) and the World Bank.

The political movement further stated that the country needed a sound economic emancipation plan that was based on empowering the natives and creating opportunities for them to do business. They said there was a need for the country to start dispersing internal wealth and ensuring domestic production and trade to ensure self-sufficiency as compared to relying on loans and other countries.

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