BUDGET SHOULD ADDRESS UNEMPLOYMENT-ECONOMIST

MBABANE – The youth need employment and the National Budget Speech on Friday should address that, says an economist. An economist in the banking sector said citizens are looking for a budget that balances fiscal responsibility with sustainable economic growth and social welfare, given the country’s economic challenges, rising unemployment and cost of living pressures. With youth unemployment estimated at 56 per cent, while overall unemployment is 35.4 per cent, the economist said government should deliver on vocational training centres that align with market demands.

According to the budget Circular from the Ministry of Finance, it suggests increased allocations for key sectors.  The Ministry of Education and Training is projected to receive E4.120 billion, up from E3.938 billion in 2024/25. Increased budgets are also anticipated for the Ministry of Health and the Ministry for Labour and Social Security.  However, experts caution that the actual distribution of these funds will be crucial for meaningful development. The economist said there is need for government to prioritise job creation through targeted infrastructure funding.

He said the construction sector was vital for employment opportunities, adding that the budget should allocate sufficient funds to infrastructure projects. The assertion by the economist is in line with the mid-term budget by the minister for Finance wherein he articulated infrastructure projects such as the Mkhondvo-Ngwavuma 1A and 1B initiatives, the construction of a new Parliament building, water projects in Manzini and Shiselweni, the International Convention Centre, and the Five-Star Hotel (ICC/FISH). The economics scholar also said the budget should accommodate skills development and capacity building. This, he said, would equip young people with job market skills and contribute to economic growth.  

The economist suggested that improving roads and infrastructure which stands to bring returns to the taxpayer in the short-term could have benefits by facilitating trade and market access.
Turning to education, the economist said the budget ceiling of E4.120 billion for the Owen Nxumalo-led Ministry of Education and Training was a valuable opportunity to reform the educational framework to meet current job market demands. He said the urgent need to align curricula with industry needs was essential and the economist suggested creating strong partnerships between educational institutions and the private sector to ensure students gain practical experience and are more employable after graduation.  

Innovation

He said this was intertwined to teacher training to effectively deliver revised curricula and foster critical thinking and innovation.The economist said as highlighted in the Speech from the Throne, elderly grants should be revised upwards, as they have been corroded by inflation. The economist said the state of social welfare, particularly for vulnerable populations, was key and the projected budget for the Ministry of Labour and Social Security of E758 million, is a modest increase. He wondered if the modest increase would cover the elderly and ensure that their grants are above inflation. The economist said the budget must reflect citizens’ socioeconomic realities. 

He argued that increasing social grants was an essential investment in stabilising vulnerable communities’ economic conditions. He also emphasised the need for affordable healthcare and social services to create a more equitable society. The economist emphasised that the national budget should bring to action the articulation of His Majesty King Mswati III’s Speech from the Throne. He said it should create strategies which will be prioritising job creation through infrastructure, enhancing education and supporting vulnerable citizens. This, he said, could lead to significant progress towards economic recovery and social equity.

The budget should provide a framework influencing the country’s trajectory.  It should address urgent issues and offer practical solutions to ongoing challenges,” he said. It is worth noting that recently, Eswatini received a reduced share of Southern African Customs Union (SACU) receipts. Despite this, economist dismissed any prospects of a cash flow challenges. They explained that the reduction in SACU receipts for this financial year will not affect the national budget.

The economists noted that the E2.6 billion reduction in SACU receipts allocated to Eswatini will be offset by the Stabilisation Fund. It was explained that the fund was specifically established to address such shortfalls, as announced by the Rijkenberg during its inception. Also highlighted was that during the previous financial cycle of SACU receipts, Eswatini had set aside E2.47 billion in the Stabilisation Fund for unforeseen circumstances. Of the E13.06 billion received during that period, only E11.5 billion was utilised to finance the national budget.

Maintain

The economics scholars commended the Stabilisation Fund as a prudent initiative by government, designed to maintain budgetary stability. It was clarified that the fund should not be mistaken for a reserve; but that it rather serves as a ‘shock absorber’ for situations like these. In addition to the SACU decline, it is worth noting that interest on outstanding loans accrued by Eswatini over the past two decades is anticipated to rise by over E300 million in the upcoming financial year, according to the mid-term financial statement.

Loan repayments are projected to increase by an average of eight per cent over the medium-term, amounting to E2.7 billion for the 2025/26 financial year. Despite these challenges, the economist anticipated that the Minister for Finance, Neal Rijkenberg, would announce an increase in domestic tax collection during the National Budget Speech.  This is expected to follow the recent upgrades implemented by the Eswatini Revenue Service (ERS). He added that government’s current expenditure trends should remain consistent, particularly when considering the ongoing economic growth trajectory.

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