Swazi students have given the Swaziland Government an ultimatum – pay us our overdue allowances by Friday or we will bring the kingdom to a ‘standstill’.
This week Barnabas Dlamini, Swaziland’s illegally-appointed Prime Minister, failed to get the European Union, the International Monetary Fund, the World Bank or the African Development Bank to inject cash into his bankrupt budget. Last week the government announced it would pay about E60 million (8.5 million US dollars) in severance pay to politicians when the present parliament ends in 2013. Damini alone will get E1.6 million, and his deputy Themba Masuku E1.4 million, when they leave office.
Meanwhile, the government has not paid tertiary students their allowances since August and many are going without food.
Now, Maxwell Dlamini, President of the Swaziland National Union of Students (SNUS), has warned, ‘If government does not pay all the outstanding allowances for tertiary students by Friday this week, (8 October 2010), she will surely face and see the wrath of the angry youth of Swaziland next week.’
He said that politicians had recently received large sums in back pay ‘at the expense of hungry students’.
‘All are this signs of an irresponsible government, a government made of selfish, greedy, myopic and self centred men who don’t care about the needs and wants of the people.’
He added, ‘We call upon the government of the illegally-appointed prime minister to release all the outstanding allowances by Friday.
‘If this is not the case, we will bring the whole country to standstill like we did in February this year. This is not a threat but a promise that we will surely keep and flood the streets of Mbabane if our key demands are not met.’
The media in Swaziland are premature in hailing the meetingbetween the Swazi Government and the International Monetary Fund (IMF)as a substantial move towards solving the kingdom’s financial crisis.
Swazi state radio SBIS was quick to call the meeting a huge success and other media in the kingdom, ruled by King Mswati III, sub-Saharan Africa’s last absolute monarch, were quick to follow. This is a pity because when it comes to news coverage SBIS is a propaganda outfit for the king and his government and cannot be trusted to tell the truth.
The Times of Swaziland,the only independent daily newspaper in the kingdom, followed the SBIS line. It reports today (6 October 2010) that Swaziland ‘appears to have finally won the support of the International Monetary Fund (IMF) and the World Bank’.
It reports, the IMF and the World Bank gave a ‘“thumbs-up”’ to the country’s fiscal adjustment programme’.
But this is a strange interpretation of what actually happened.The IMF and World Bank said that Swaziland needed a proper plan to improve government spending and finance management. It added it would help Swaziland to draw up such a plan.
And that was it. This is what the IMF has been telling Swaziland for years. Its economy is in a mess because of bad management by the government. It is still in a mess, the IMF says, and more work needs to be done.
That means that the IMF still wants the government to cut public spending and sack civil servants.
The Swazi Government is trying to get a loan of about E525 million (75 million US dollars) from the African Development Bank (ADB). In August 2010, the ADB said Swaziland needed the support of the IMF and World Bank. That support was not forthcoming.
The IMF and World Bank have not given that support this week, so nothing has changed.
Now there is a real likelihood that the government does not have money to pay its salary bill this month (October 2010). Finance Minister Sithole had assured civil servants the money would be there, but earlier this week the European Unionsaid it would not bail out the government and now the IMF and World Bank have not come up with the necessary letters of support to get the ADB loan.
Prime Minister Dlamini and Finance Minister Sithole should come clean: they have failed to get the money.
Swaziland has taken a major step towards bankruptcy now both the International Money Fund (IMF) and World Bank (WB) have refused to back its attempt to get a loan of half a billion US dollars from the African Development Bank.
They refused to assist Swaziland because they are fed up with the way the Swazi Government has consistently refused to take proper control of the economy.
In particular the IMF and WB are angry that the Swaziland Government continues to ignore their advice to cut back on the amount of money it spends on civil servants’ salaries. They say the size of the civil service is too big for a kingdom as small as Swaziland.
The Swaziland Government even went so far as to raise civil service salaries this year by 4.5 percent (2010) and therefore increase its spending by E200 million (about 25 million US dollars), not decrease it.
The IMF has also been worried in the past that Swaziland wasn’t spending public money wisely. The Sikhuphe International Airport is a case in point. Despite IMF advice not to proceed with the building, the airport – a vanity project for King Mswati III, sub-Saharan Africa’s last absolute monarch – is being built. The last official estimate was that it would cost 1 billion US dollars by the time it is completed. The completion date keeps getting put back so it is a fair bet this cost will rise still further.
The refusal to back the loan comes as a point that Swaziland’s economy is in freefall. This year the money the kingdom received from the Southern African Customs Union (SACU) was cut to E1.9 billion from E6 billion last year. SACU receipts accounted for 66 percent of the national budget in 2009. It is unlikely that receipts will rise significantly in future years and they might actually fall further.
To counter the effects of this, the Swaziland Government ordered all departments to slash their budgets by 14 percent to immediately save E1.5 billion.
Swaziland’s foreign reserves are also falling. Sithole told Parliament last week that the kingdom had enough reserves to cover the cost of 3.1 months of imports. He described this as ‘acceptable’, but in fact it is not 'acceptable' and is far below the six months level recommended by the Southern Africa Development Community.
And there’s little hope of Swaziland attracting foreign direct investment (FDI). As was reported in November, Swaziland is not deemed as a good place for investors to set up business because of its small market, its people are too poor and Swaziland’s limited international reputation as a destination for FDI.
Sithole admitted to parliament that the IMF and WB ‘refused to give us a letter of comfort because they are not convinced with our fiscal adjustment programmes’. He said as a result the government is facing a cash flow problem and the government could soon not be able to meet its commitments.
This means salaries will go unpaid and there will be no money for services such as health and education.
‘We are faced with a cash flow problem such that we might find ourselves lacking actual money to make purchases,’ he said.
‘There is no fear that government could grind to a halt,’ said Sithole.
But Sithole says he is on top of the situation. One ‘solution’, he says, is to make sure government collects all revenues and taxes due to it.
Things were going well he said and so far the government had received E36 million (about 4.5 million US dollars).
Oh that’s all right then. You do the arithmetic – the Swaziland Government fails to secure a loan for 500 million dollars, but it has 4.5 million in taxes to make up for it.
