BY MBONGENI NDLELA
MBABANE – The African Development Bank Group (AfDB) has predicted that in 2024 Eswatini’s fiscal deficit is expected to narrow to 3% of the Gross Domestic Product (GDP) from 5.1 % recorded in 2023.
AfDB group, which is a regional multilateral development finance institution established to help the institution’s regional member countries, all of which are African countries, develop economically and to promote their social progress, says Eswatini’s positive statistics will be caused by the strong rebound in Southern African Customs Union (SACU) receipts.
A fiscal deficit is a shortcoming in the income of a government as compared to its spending. It is the difference between the total income of the government and the total expenditure incurred by it. This difference is filled by government borrowings.
According to the AfDB Eswatini Economic Outlook report, in 2023, GDP growth was projected to be maintained at 3.5 percent, supported by a rebound in domestic demand and rejuvenation of consumption and investment spending.
The African Development Bank (AfDB) group is a regional multilateral development finance institution. It was established to help the institution’s regional member countries, all of which are African countries, develop economically and to promote their social progress.
The report states that inflation was projected to remain elevated, averaging 5.3% over 2023–24, attributed to persistent global inflation and a weaker rand.
“The fiscal deficit is expected to narrow to three percent of GDP in 2024 from 5.1 percent in 2023 due to a strong rebound in Southern African Customs Union (SACU) receipts. With the forecasted higher growth trajectory, the public debt–to-GDP ratio is projected to decline to 41 percent in 2023 and 38 percent in 2024. The current account surplus is projected to average 0.9 percent in the medium term due to higher secondary income flows spurred by SACU. Economic tailwinds include the huge increase in SACU revenue windfalls and the proposed SACU Stabilisation Fund, expected to foster fiscal stability. Headwinds remain higher global inflation, weak growth in South Africa, and the difficult sociopolitical context,” states the ADB report.
Meanwhile, World Bank in Eswatini has also reported that Eswatini’s economic prospects for 2023 and 2024 are favorable, partly because of higher Southern African Customs Union (SACU) revenues.
The bank has stated that the Eswatini government budget proposes an expenditure increase, as SACU revenues are expected to double in 2023.
“The projected increase in government expenditure will support economic activity, and external funding of major capital projects such as the Mkhondvo-Ngwavuma dam will boost both demand and supply. The wholesale and retail, construction, and public administration sectors are all expected to benefit from higher public spending. The tourism sector is expected to continue its recovery and remittances are picking up,” stated the World Bank in Eswatini. “However, difficulties in the external and domestic environments constrain the country’s growth potential. Although real GDP growth is expected to reach 3.0% in 2023 and 2.9% in 2024, global turmoil is likely to dampen economic activity. With Ukraine and Russia together accounting for over 30% of the global supply of food and commodities (grains, oils, fertilizers, and energy), the ongoing war in Ukraine will continue to affect global output, disrupt supply chains, and raise commodity prices,” stated the bank.
