Eswatini’s fiscal deficit expected to increase

By Ntombi Mhlongo

Eswatini’s fiscal deficit is expected to increase to E4 billion, representing 5.5 per cent of the country’s Gross Domestic Product (GDP).

This was revealed by Finance Minister Neal Rijkenberg during his Mid-Term Budget Review Report at the House of Assembly today. The minister revealed that the fiscal deficit for 2022/23 is now expected to reach E4.19 billion which translates to 5.5 per cent of GDP (based on September 2022 GDP forecast) compared to a budgeted deficit of E3.88 billion (4.9 per cent of GDP based on September 2021 figures).

“This implies that to avoid further accumulation of arrears, the Government has to raise about E2.7 billion in the capital market in the financial year 2022/23,” the minister said.

He highlighted that the public debt stock in 2022/23 is estimated to be E33.1 billion, translating to 43.8 per cent of GDP and that the scope for extended domestic financing has been limited. In the period under review, the minister said domestic debt stock stood at E17.3 billion, 23 per cent of the country’s GDP.

On the other hand, external debt is expected to account for 48 per cent of the total public debt stock in 2022/23, which is composed of externally financed capital expenditure as well as acquired budget support loans.

“Over the medium term, the government remains committed to bringing the fiscus into a sustainable path. Expenditure rationalisation and revenue-enhancing measures are expected to continue into the medium term. The fiscal deficit is anticipated to average 2.3 per cent of GDP over the medium term. The reforms on state enterprises are also expected to yield positive results. However, the process is taking longer than anticipated, consequently delaying the gains from the reforms in the outer years,” he highlighted.

Also highlighted in the review report is that total revenue is expected to grow both on the domestic collection and SACU receipts in the medium term. In 2023/24, revenue and grants are expected to amount to E23.85 billion.

Total revenue and grants are expected to grow by around 24 per cent in 2023/24 when compared to 2022/23. The growth projection is attributed to higher anticipated domestic revenue collection, specifically on items such as income tax and taxes on goods and services, and a rebound in SACU receipts.

In the 2024/25 financial year, total revenue and grants are expected to slightly decrease by 6 per cent, amounting to E22.5 billion followed by a 3 per cent growth in the 2025/26 financial year which translates to E23.2 billion.