swaziland times

BABANE – Finance Minister Neal Rijkenberg said the private sector has confidence in the state and will drive economic growth beyond the current 5 percent.

Reichenberg said the country’s economy is on an upward trajectory and has already exceeded previous forecasts. The minister said he personally believes that economic growth could exceed 7% or 8% in the medium term. Reichenberg said that according to the proposals submitted by members of the People’s Assembly during Ramadan, the impetus for economic growth mainly comes from the state’s stance on fighting corruption. On the issue of corruption, the minister said they were revealing everything through forensic investigation and internal investigation was also underway.

Extensions

He said this gave the private sector confidence, which in turn fueled expansion. Rickenberg said it meant the private sector believed corruption was under control and that those in power were doing the right thing. “The fact that growth is coming from the private sector, rather than massive government investment, means we are on the right track,” he said. The minister said the government’s investment in infrastructure will also have a positive impact and ensure that economic growth is felt by the public. Reichenberg said in his budget speech in February that the country could become a leader on the continent in terms of gross domestic product (GDP) growth, which in turn would address unemployment and poverty.

The minister stressed that the current growth rate is about 5%, but if the country takes a conservative 3% as a benchmark and then adds the possible growth percentage of the projects they are implementing and planning to implement, then one would note that the country has the potential to reach a growth rate of 10.2% by the end of his term in 2028. The budget deficit for the 2024/25 fiscal year is expected to be 1.96% of GDP, equivalent to 1.84 billion euros. He added that government revenue (excluding grants) for the 2024/25 fiscal year is expected to reach 26.99 billion euros, which is 28.8% of GDP, with an increase of 1.1% in 2023/24. It is worth noting that Rickenberg said in the February 24, 2024 budget that the government is constructing the Mpakeni Dam, which will provide water for irrigation and other developments, mainly in the Shiselweni district.

loan

He also presented a bill for a loan to build a canal for the dam. The minister said that unlike previous bulk water infrastructure projects, on this project the government is building the dam, canal and field infrastructure at the same time so that once the dam is built, the entire project can start supplying water to farmers immediately. “This project should give us a GDP increase of 0.25% in 2026, 0.5% in 2027 and 2% in 2028. The LUSIP II project has also been budgeted 417 million euros to complete the project so that the country can start to get real returns from its utilization and contribute to overall growth in the medium term. With the launch of these projects, it will bring us 0.5% growth in 2024, 0.5% in 2025 and 0.75% GDP growth in 2026,” he said. Additionally, the World Bank said Swaziland’s economic outlook for 2024 is good, partly due to increased revenues from the Southern African Customs Union (SACU).

project

The World Bank predicts that increased government spending will support economic activity and external financing of large capital projects such as the Mkhondvo-Ngwavuma Dam, which will stimulate both demand and supply. “The wholesale and retail, construction, and public administration sectors are all expected to benefit from increased public spending. The tourism industry is expected to continue to recover and remittances are also expected to increase,” the World Bank predicted. However, it noted that the difficult external and domestic environment constrains the country’s growth potential, and although real GDP growth is expected to continue to reach 4.1% in 2024, global turmoil and a slowdown in South Africa, a major trading partner, may curb economic activity.

Despite this, the World Bank said Swaziland still faces multiple development challenges in ensuring inclusive, sustainable and resilient economic growth. Chief among these challenges is Swaziland’s unsustainable public sector-driven growth model, which has trapped the country in a balance of low growth, high poverty and inequality, and has crowded out investment in productive sectors and private sector development, the World Bank said.