…First inflows expected before end of August
…Funding to support roads, capital projects nationwide
…Govt explores 15-year inflation-linked Treasury bond
BY SIFISO NHLABATSI
MBABANE– Government expects its cash-flow position to begin improving by the end of this month as it works to raise the E1.5 billion required to fully fund the current financial year’s budget.
Finance Minister Neal Rijkenberg said positive discussions were underway to secure the funding, with some inflows expected to start coming in before the end of August.
Speaking during the Ministry of Finance’s Finance in Focus programme on Monday, Rijkenberg acknowledged that government was still experiencing cash-flow pressure but said progress was being made in mobilising the required resources.
“There are many different discussions taking place, positive discussions, just it’s never quick,” he said.
Rijkenberg said government was optimistic that, over the next few months, beginning at the end of August, funds would start flowing in and provide much-needed relief to the country’s cash-flow position.
The minister explained that the current national budget was fully financed in principle, although government still had to raise E1.5 billion during the course of the financial year.
He said securing the funding was particularly important because a significant portion of the current budget had been directed towards capital projects being implemented across the country.
“This year’s budget, again, has a lot of government-funded capital projects, including many roads,” he said.
Rijkenberg highlighted the construction of rural roads, particularly double-seal roads, among infrastructure projects being funded directly by government.
He said raising the E1.5 billion would therefore not only ease immediate cash-flow pressure but also support infrastructure development expected to stimulate economic activity and contribute to long-term economic growth.
“We are now raising the funding as government, calling it budget support, but really funding a lot of these capital projects going on around the country, which again are really good for the economy and will help the economy to grow,” he said.
The minister also sought to clarify public perceptions surrounding budget support, saying it should not automatically be interpreted as money intended only for recurrent expenditure.
He explained that budget support could also finance capital expenditure and strategic projects that government had decided to undertake beyond the cash resources originally available.
Rijkenberg cited the completion of the International Convention Centre (ICC) as an example of expenditure that had placed pressure on government’s cash flow after a decision was taken to complete the project despite the necessary funding not having been available in the budget at the time.
He maintained that such decisions could still produce economic benefits because completing strategic infrastructure earlier allows the country to begin deriving value from the investment sooner.
Meanwhile, government is also exploring new ways of raising funds domestically, including the introduction of longer-term Treasury bonds.
Rijkenberg said the ministry had tested the market with a proposed 15-year floating-rate, inflation-linked Treasury bond, with the possibility of introducing even longer-term instruments in future.
He said such an instrument could attract institutional investors, including pension funds, while reducing some of the risks associated with fixing interest rates over very long periods.
According to the minister, market response will determine how government proceeds with the new financing instruments.
He nevertheless expressed optimism that expanding the range of financing options available to government could strengthen the country’s ability to mobilise resources, fund development projects and improve its overall financial position.
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(Courtesy Pic)
