MBABANE – Compared to other countries in the Southern African Development Community (SADC), the kingdom is doing well as it has the lowest public debt.
Public debt comprises all outstanding loans and guarantees that a central government owes to its creditors. This debt may be internal, originating from the sale of bonds within the government’s territory; or external, as received from foreign governments or international institutions such as the World Bank. The amount of public debt a government holds does not itself indicate that government’s economic strength or weakness. Often, strong economies are quite active with international trade and have large amounts of public debt. Instead, the ratio of that public debt to the country’s Gross Domestic Product (GDP) is a more accurate, internationally accepted measure for assessing a nation’s debt and potential credit risk.
Despite imposing a ban on capital ventures, the country has been in continuous need for international funding to execute a number of projects. There has been a cycle of requests by Cabinet for approval of loans from Parliament – such that at some point, legislators complained that each time the Minister of Finance, Neal Rijkenberg, went to Parliament, he was seeking approval for a loan. This culminated in some parliamentarians questioning Rijkenberg if the country had the capacity to repay all the loans it had received from international funding institutions. The issue at hand was that the politicians were of the view that the endless loans would be to the detriment of the country in the near future. Worth noting is that most of the loans are for incomplete capital projects; which has led to a continuous series of seeking loans by the country to fulfil its obligations.
Recently, politicians in the House of Assembly were informed that the country needs over E1 billion (US$71.6 million) to complete the International Convention Centre (ICC) and the Five Star Hotel (FISH). This is not the only loan; the country needs over E210 million for the second phase of the Lower Usuthu Smallholder Irrigation Project (LUSIP), an equivalent of US$15 million. This cyclical sequence is pushing the country into reaching the 35 per cent Gross Domestic Product (GDP) mark – which is the cut-off line for a country before it enters into fiscal distress.
Times Of Eswatini