A mission of the International Monetary Fund (IIMF)) led by Mr.. J iro Honda visited the Kingdom of Swaziland during April 28 ‒ May 12 , 201 4 to conduct the 2014 Article IV c onsultation with Swaziland.. The mission met with the Prime Minister,, Hon.. Sibusiso Dlamini ; Minister of Finance,, Hon.. Martin Dlamini;; the Governor of the Central Bank of Swaziland,, Mr.. Majozi Sithole;; other senior government officials , as well representatives of the private sector an d development partners.. The mission would like to express its gratitude to the authorities and the ir staffs for the highly professional,, productive,, and open discussions..

At the end of the mission,, Mr.. Honda issued the following statement::

“ Swaziland ’ s economic growth has recovered since 2011 when it experienced a fiscal crisis follow ing a significant reduction in revenues from the Southern African Customs Union (SSACU)).. In 2013,, economic activit y is estimated to have grown by 2 ¾ percent . The recent surge in the SACU revenue helped to improve international reserve coverage to about four months of imports by M a rch 2014.. With a return of confidence in the economic outlook,, commercial bank credit to the private sector has been growing,, while the recent govern ment bond auctions were oversubscribed.. Inflation remained modest at 5.1 percent in March 2014 .

“ Swaziland ’ s challenges , however,, remain significant.. T he recent fiscal crisis points the need to strengthen Swaziland ’ s resilience to shocks , while the economy has suffered from weak growth performance,, which adversely affects social developments.. Furthermore,, there are risks to Swaziland ’ s economic prospects , in particular the uncertain global and regional economic outlook that could lower SACU revenue s . Swaziland ’ s key economic policy challenges are to strengthen its resilience to exogenous shocks and achieve high,, inclusive growth,, while meeting critical social and development needs..

“ In light of these challenges and the need to safeguard the exchange rate peg,, the mission encourages the authorities to maintain prudent fiscal policy (wwith a fiscal deficit less than 2 percent of GDP)) over the medium – term , while protecting spending for critical social and development needs . Such a prudent fiscal policy stance would help build a sufficient international reserve buffer (ffive to seven months of imports)) and maintain modest debt distress , and p rovide Swaziland with better protection for possible shocks . To help implement the prudent fiscal policy,, the mission also encourages the authorities to enhance efforts for public sector reforms and public financial management reforms , while welcoming further efforts to enhance tax administration..

Mbabane , Swaziland

International Monetary Fund

Washington,, D..CC.. 20431 USA

“ The mission echoe s the authorities ’ concerns about weak growth performance.. T his weak performance has been largely associated with low private sector development (ddepressed private investment in particular)).. In this light,, the mission encourages the authorities to proceed with wide – ranging structural reforms,, including further improving business climate,, facilitating financial intermediation,, and pursuing land management reforms.. To this end,, the mission commends the Central Ba n k of Swaziland ’ s plan to formulate a Financial Sector Strategy,, with technical assistance from the IMF and the World Bank . ”