Kingdom of Swaziland: 2014 Article IV Consultation-Staff Report; and Press Release

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Release Date: © July, 2014
ISBN : 978-1-49834-459-3
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Setting: Swaziland has gradually recovered from the fiscal crisis of 2010-11, buoyed by the 
improved revenues from the Southern African Customs Union (SACU). Growth modestly recovered, and 
international reserves rebounded. Swaziland’s challenges, however, remain significant, in view of 
its high vulnerability to exogenous shocks and its sluggish growth performance, while facing 
significant social and development challenges with high unemployment and the prevalence of 
HIV/AIDS. Swaziland now stands at a critical juncture to strengthen its resilience to exogenous 
shocks, address its weak growth performance, and meet critical social and development needs.
Outlook and risks: Under the status-quo policies, the outlook is for continued sluggish growth and 
increasing fiscal and external imbalances, reflecting low private investment, elevated government 
spending, and prospective decline in SACU revenues. Risks are associated with the high volatility 
of the SACU revenues, possible negative spillovers from South Africa (including higher policy rate 
and lower growth), and uncertain prospects for preferential trade agreements with the U.S. and EU.
Strengthening Resilience to Shocks: Over the medium term, international reserves should be targeted 
at five to seven months of imports, and public debt be kept below 30 percent of GDP. This calls for 
a prudent fiscal policy stance, with fiscal deficit below 2 percent of GDP.
Raising growth: It is essential to enhance the efficiency of the public sector and promote private 
sector-led growth through structural reforms including improving business climate and accelerating 
land reforms.
Maintaining financial stability: Financial soundness indicators are generally strong. The strong 
growth of the nonbank financial sector in recent years calls for strengthening of supervision and 
regulation for the sector.
Past advice: There is broad agreement between the Fund and the authorities on macroeconomic policy 
and structural reform priorities. With the authorities’ fiscal consolidation efforts and the 
improved SACU revenues, fiscal and external sustainability is being restored, consistent with 
staff’s advice. However, progress on structural reforms—including re-launching the privatization 
process, improving access to modern
finance and improving the business climate—has been modest.

More publications in this series: IMF Staff Country Reports