By Ntombi Mhlongo and Phephile Motau
The Minister of Finance, Neal Rijkenberg will face his biggest test yet in his last year in office.
In a month, he is expected to deliver his last Budget Speech for the 11th Parliament which must cater for crucial capital projects, the national elections, and gratuities for outgoing politicians.
Civil servants are also expecting the government to review their salaries, which were last reviewed in 2016. The minister will be expected to allocate funds for all the projects amid a worldwide economic crisis that requires belt-tightening strategies to increase revenue and cut down expenditure.
From the projected expenditure of E20.3 billion for the 2023/24 financial year, Rijkenberg needs to find an additional over E2 billion to fund elections, payment of outgoing politicians (Members of Parliament and members of Boards and Councils), and the salary review for civil servants.
Strikingly, this amount will all go to recurrent spending.
The national elections alone will cost more than E300 million based on the amount that was spent the last they were held in 2018. This time around, the figure is expected to further increase following the addition of four constituencies and other economic factors.
Over and above the elections project, the government is expected to fork out close to E200 million for the payment of gratuity and other terminal benefits for the outgoing politicians associated with the public office they hold.
The expected payment is per Finance Circular No. 2 of 2013 which provides that an ex-gratia payment is payable to Parliamentarians and full-time councils members (Emabandla) who were not returning to Parliament and, or full-time Emabandla or any other political office at the end of their term of office.
The ex-gratia is a once-off payment equal to 12 months (1 year) of basic salary before taxation. The circular provides that if a Parliamentarian does not fully serve the five-year term, the ex-gratia payment will be pro-rated considering the actual period served.
It also stipulates that under no circumstances will a part-year served to be considered a full year. Should the Parliamentarian be dismissed or removed from office due to misconduct or incompetence, the ex-gratia payment will be forfeited.
The gratuities will cost the government around E155 million according to calculations done by the Eswatini Financial Times based on the Circular.
This includes E105 million for Cabinet ministers, Parliamentarians, bucopho and tindvuna tetinkhundla.
This does not include the exit packages for both the Prime Minister and Deputy Prime Minister. The gratuities will be paid to outgoing politicians including 18 Cabinet members, two presiding officers, and their deputies, 89 MPs and senators, 59 tindvuna tetinkhundla (constituency headmen) and 336 bucopho.
Besides the outgoing MPs, the government will be expected to pay gratuity to members of councils (Emabandla). Calculations reflect that about E50 million will be needed to cater for the gratuity of the members of Emabandla.
There are three sets of Emabandla, three commissions, and three Boards expected to benefit from the government purse, according to the circular.
The councils are Liqoqo which comprises 22 members, Ludzidzini Council with 18 members, Border Restoration Committee with 13 members, and Elections and Boundaries Commission with five members.
The rest of the emabandla are the Teaching Service Commission (TSC) with four members, Civil Service Commission with four members, Land Management Board with four members, Citizenship Board with four members, and the Minerals Board with four members.
Once the national elections have been finalised and a new Parliament and Cabinet are in place, the government will also be expected to fork out money to cater for what is known as relocation and settling-in allowance.
According to the circular, this is a once-off settling-in allowance that should be payable to the new Prime Minister, Deputy Prime Minister, Presiding Officers, Ministers, Regional Administrators, Deputy Presiding Officers, and Members of Parliament.
The allowance will be equal to 15 per cent of the respective Parliamentarian’s annual basic salary and will be payable upfront. The budget estimates show that the projected expenditure for the financial year 2023/2024 is E20.3 billion.
This includes capital expenditure to the tune of E4.48 billion, appropriated recurrent expenditure of E14.7 billion, and statutory expenditure worth about E1.1 billion. However, the national elections and salary review have not been catered for and these will fall under the recurrent expenditure.
Some of the capital projects that the government will embark on are funded by international financiers, local funds, or grants.
The minister might have to defer some of these projects to be able to accommodate pressing matters. The projects which are expected to commence this year according to the budget estimates include the construction of the National Referral Hospital, the Construction of a new Parliament, the rehabilitation of a Fire Service Department to the tune of E15 million, and the construction of Sidvokodvo Industrial Estate for E231 million.
Other works which are anticipated to begin next financial year are the Mkhondvo-Ngwavuma Water Augmentation Project (MNWAP) which will be funded by both the government and the African Development Bank.
Civil servants are entitled to a salary review after every five years, which means they were due for such in 2021 since they last had it in 2016.
In the current financial year, the government had set aside E20 million for a consultant to conduct the salary review exercise. If it is completed, it will have to be implemented.
The 2016 salary review civil servants received increments of up to 42 per cent. This, according to Rijkenberg in his 2022/2023 budget speech increased the country’s wage bill by 22.5 per cent to E6.5 billion, from E5.3 billion. This means that the exercise cost the government E1.2 billion.
Worth noting is that when presenting the country’s mid-term budget report in November last year, the minister did not hide the fact that the government has been running persistent fiscal deficits in the recent past.
This is because of volatile Southern African Customs Union (SACU) receipts causing large swings in revenue collection coupled with inadequate response in Government expenditure controls.
He mentioned that from a domestic perspective, the tight fiscal space arising from lower-than-expected revenue collections (especially lower SACU revenues) and high accumulation of debt, limit the scope for discretionary spending and thereby weigh negatively on growth.
He further revealed SACU receipts declined from E6.38 billion in 2021/22 to E5.82 billion in 2022/23 which is equivalent to 8.88 per cent.
In the half year 2022/23, the Kingdom of Eswatini received E 2.9 billion from SACU receipts compared to E3.2 billion in the year 2021/22.
Rijkenberg admitted that this source of revenue continues to prove volatile and there is little control to manage it.
The only hope the minister provided was that there could be an improvement in the SACU receipts only if the SACU Stabilisation Fund comes into effect.
He said the 2023/24 financial year, SACU is expected to grow by 67.2 per cent to E9.66 billion from E5.8 billion, followed by E7.09 billion in 2024/25 and E7.12 billion in 2025/26, assuming some of the SACU receipts are put in the proposed SACU Stabilisation Fund. However, the regulations for the fund have not been adopted and passed.
‘I have a plan for high expenditure’
Rijkenberg says he has plans to finance the high expenditure anticipated in the next financial year. The minister acknowledged that the next budget would need additional funding.
“We have plans in place and we will have the budget speech to announce exactly what those plans are,” Rijkenberg said.
Meanwhile, Economist Thembinkosi Dube said it would be detrimental to the country’s economy for the government to defer capital projects.
This, he said when asked by the Eswatini Financial Times about strategies that the government could take to deal with the anticipated huge expenditure in this year’s budget.
He further acknowledged that the expenditure would be high due to the impending elections, salary review, and gratuities for politicians, yet the country was not in a stable financial position.
Dube said the capital budgets injected money into the economy and created jobs, and therefore they were important. He said some of the capital projects also dealt with items crucial for the country including infrastructure and healthcare, so it would not be good for the government to defer them.
He said a report from the Central Bank of Eswatini indicated that the country’s reserves had increased due to money received from the International Monetary Fund.
Dube said this money was for capital projects and this would help cushion the high expenditure as money for such important projects would not have to come directly from the government’s coffers. He said it would be better if the government had a particular fund from which the gratuities of politicians were paid.
Estimated gratuities for politicians:
Beneficiaries
Cabinet Minister (18)
E14.2 million
Presiding Officers (2)
E1 574 856
Deputy Presiding Officers (2)
E1 375 892
MPs and Senators (89)
E52 million
Tindvuna Tetinkhundla (59)
E6 million
Bucopho (336)
E29.7 million
Total Gratuity
E105 247 807
Liqoqo (Chairman, Secretary, 21 members)
E13 781 016
Ludzidzini Council (Chairman and 15 members)
E9 479 148
Border Restoration Committee (Chairman and 13 members)
E8 736 891
Elections and Boundaries Commission
(Chairman and three members)
E3 587 149
Teaching Service Commission
(Chairman and four members)
E3 032 268
Civil Service Commission
Chairman and four members
E2 964 929
Land Management Board
(Chairman and four members)
E2 964 929
Citizenship Board
(Chairman and four members)
E3 032 268
Minerals Board
(Chairman and four members)
E3 126 548
