Development groups say new deals open African economies up to too much competition.
The country’s economic growth rate halved between 2008 and 2009 from 2.4 per cent to 1.2 per cent [EPA]
Thousands of public servants in Swaziland are due to lose their jobs in cutbacks as part of a government bid to gain approval from the International Monetary Fund for a loan. But some Swazis would rather see the budget slashed for the country’s autocratic royals.
The civil service of the tiny Southern African monarchy comes with a high wage bill, as 50 per cent of national spending going towards 35,000 state posts.
Retrenching 7,000 civil servants and freezing the salaries of others offer “the only way out of this economic crisis”, said finance minister Majozi Sithole.
The government has already halted capital projects such as the construction of the planned multi-million dollar Sikhuphe International Airport.
The country’s economic growth rate halved between 2008 and 2009 from 2.4 per cent to 1.2 per cent.
Foreign direct investment has also declined.
“The situation is such that we have to act now,” said Sithole. “We can no longer procrastinate.”
In October the government presented a so-called fiscal road map to the International Monetary Fund (IMF), the World Bank and the African Development Bank (AfDB).
It listed retrenchments and privatisation among the strategies that the government will implement to deal with shrinking state revenue.
However, these cutbacks will “not include health and education,” Sithole assured economic experts on November 8, 2010.
The government had already introduced voluntary early exit packages as far back as 2004 to try and reduce the number of civil servants, said Sithole, but “we had a situation where productive staff wanted to take the packages while those stayed who were supposed to leave”.
The IMF will monitor the implementation of the programme for six months before deciding whether to give the go-ahead to the AfDB to commit funds to Swaziland.
The government has impressed the IMF on paper but has to be “tested” on implementation.
“If this road map is implemented effectively, government will not have to borrow money after 2015,” Joannes Mongardini, IMF team leader to Swaziland, told the same team of economic experts.
The country’s economic woes follow the 60 per cent drop in receipts from the Southern African Customs Union (SACU) that have traditionally made up more than half of the national budget.
The drop is due to the international economic and financial crisis.
For a number of years the IMF has warned the Swaziland government against its huge wage bill and dependency on SACU receipts.
In 2007, an IMF mission to Swaziland recommended that the government save some of its SACU revenue.
The IMF had projected that SACU receipts would reduce significantly after 2010.
“Unfortunately the government increased its expenditure when the SACU revenue went up during the period between 2004 and 2008,” said Mongardini.
He said if the government saved the surplus earnings from SACU, the country would not be experiencing economic difficulties.
“We need everyone to make sacrifices to save the country from these financial troubles,” said Mongardini. “Even trade unions recognise this and are willing to make sacrifices – as long as the sacrifices are evenly distributed among all Swazis.”
This is where the government will face its biggest challenge.
Public servants have put their feet down, demanding that government should first reduce royal expenditure, the number of appointed members of parliament and the number of government ministers.
Money allocated to the ruling royal family is not debated in parliament. The king appoints 30 parliamentarians in addition to the 55 elected by the people. The government has 19 ministries.
Sithole also acknowledged that the government loses over six million dollars a month through corruption: “We’re trying to strengthen our procurement systems to deal with this problem.”
Vincent Dlamini, president of the National Public Service and Allied Workers’ Union (NASPAWU), is opposed to the planned retrenchments: “You need the workers for service delivery.”
NASPAWU regards the IMF as “elitist” because it imposes structural adjustments on poor countries that make survival even more difficult for people who are struggling.
Dlamini also pointed to how the adjustments merely shift services from the state to the private sector: “What you will see is that civil servants will be retrenched and the same people will provide those services after privatisation.”
In this case the government plans to set up autonomous agencies that will absorb the bulk of the retrenched workers, a move welcomed by Emmanuel Ndlangamandla, director of the Coordinating Assembly of Non-Governmental Organisations (CANGO).
“We have also been made to understand that retrenched workers will be trained to become entrepreneurs.”
Ndlangamandla remains confident that the exemption of health and education from the cutbacks means that such services will not be affected: “We do not expect government stop helping the poorest of our people.”
Sithole did inform journalists that the government wants the flexibility of borrowing from both the international financial institutions and from local banks and pension funds.
“The law stipulates that 30 per cent of pension funds should be invested in the country. The money is lying around in banks (as shown by the lack of) capital projects in the country,” said Sithole.
The government will compare the interest rates of local and international institutions as part of deciding on possible sources of loans.
This article first appeared on the Inter Press Service News Agency.