CENTRAL BANK WARNS; ‘We ARE not out of the woods’

MBABANE – Contrary to earlier reports that the  country was out of the fiscal crisis, the Central Bank of Swaziland has clarified.

Central Bank Governor Martin Dlamini when officially presenting the bank’s 2012/2013 annual report yesterday said the country was not yet out of the woods.
This is against assumptions of many commentators after the announcement of the country’s budget speech by Minister of Finance Majozi Sithole in February.

In his budget speech, the minister announced that government would review public sector employees’ salaries and further announced the review of taxes especially Pay As You Earn (PAYE). All these have been implemented; salaries for public sector employees were increased by five per cent, prompting many to think the country was back into the fiscal comfort zone. After delivering his speech, which lasted about 30 minutes, the governor was asked to give a clear clarification on the country’s position regarding its fiscus.

“The country is not yet out of the doldrums. This is despite the increment of the Southern Africa Customs Union (SACU) receipts inflow in 2012/13 fiscal year which provided liquidity for government to clear most of its accumulated arrears to the private sectors of the economy, such as construction,” Dlamini said.

The Governor said this status was due to that government does not have a sustainable and reliable source of revenue other than SACU. He opined that government should work on a strategy to establish a sustainable and reliable source of revenue. 
He further said the fact that the country’s economy has grown by less than two per cent was also an indicator that it was still facing some challenges.

From a broader perspective, the Governor said global economic conditions remained sluggish in 2012, with the world’s economy still struggling to recover following the emergence of the global financial crisis four years ago. The International Monetary Fund (IMF) projected that global growth will ease from 3.9 per cent in 2011 to 3.2 per cent in 2012, mainly due to weak activity in industrialised countries emanating from an un-abating Euro zone financial crisis. Dlamini said economies in the Sub-Saharan African region grew by a slower growth of 4.8 per cent in 2012 compared to 5.3 per cent growth in 2011.

“While the global economy remains fragile, the domestic economy performed relatively better in 2012 than in 2011. Provisional Gross Domestic Product (GDP) estimates show that the economy grew by 1.7 per cent in 2012, depicting an improvement from the 0.6 per cent decline recorded in 2011,” said the Governor. Adding he said the slower economic performance of the country was due to the poor performance of the European Union (EU) and South Africa markets, which collectively consumes about 70 per cent of Swaziland’s exports.

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