BY PHESHEYA IAN KUNENE
MBABANE – Eswatini’s disciplined fiscal management has been able to put itself among the five countries with the lowest public debts.
This move has been hailed as one that would help Eswatini to unlock more scholarship opportunities for students. This is according to UNESWA Economist Sanele Sibiya.
Speaking during the EBIS 1’s Letishisako radio programme, Sibiya said he was impressed with the determination shown by the country in paying off its debts as he said it was important for the country to make sure that its debts were not above 40 percent when compared to its overall production.
According to the IMF, Eswatini is currently maintaining significantly lower public debt levels compared to its regional counterparts and was therefore among the top five countries with the lowest debts.
“This is a good thing for the country as it will allow the country to have more funds for scholarships and will be able to pay salaries of civil servants as more debts lead to the country struggling financially as most of the money goes to these debts and it becomes difficult to pay salaries or offer scholarships to other students, so we are happy that the country is doing its best to pay off its debts,” Sibiya said.
He added that Eswatini’s strategic economic policies have also contributed to setting the country apart while adding that he does not wish to see the repeat of the year 2010 when the country had more debts and was struggling to finance them.
In addition, Sibiya said it was vital for the country to maintain a low government debt as this was critical for countries seeking to stimulate economic growth, raise living standards, and attract international investment.
He said countries with low debt loads gain from currency stability, and better investor confidence, amongst other fiscal benefits.
The Africa Pulse report by the World Bank, released in October 2024, sheds light on the importance of keeping government debt manageable. Sub-Saharan Africa’s public and publicly guaranteed (PPG) debt has quadrupled since 2006, rising from US$108 billion to US$462 billion in 2022.
The report says countries with little debt are less likely to experience complex problems within their economy. For example, a low debt burden could bolster currency strength which in turn, helps reduce inflation and makes essential commodities such as food and gasoline cheap.
Eswatini is one of the countries with the lowest debt-to-GDP ratios in Africa, along with Burundi and Congo. Eswatini’s debt-to-GDP ratio is 15%.
Eswatini’s debt management strategies and economic policies have helped it maintain a stable environment for growth and development. Some of the factors that have contributed to Eswatini’s fiscal prudence include:
Debt management strategies: The government has effective debt management strategies.
SACU Revenue Stabilisation Fund: This fund holds E1.28 billion and acts as a financial buffer against volatile Southern African Customs Union (SACU) receipts.
Monetary policy: Eswatini has maintained a balanced approach to monetary policy, despite regional economic challenges. Additionally, it is believed that foreign investors prefer to invest in nations with low debt-to-GDP ratios because they are perceived as less hazardous.
Moreover, the report also mentions that low debt levels allow governments to devote more of their budgets to essential areas such as healthcare, education, and infrastructure. One important measure of a nation’s debt sustainability is its debt-to-GDP ratio. A lower ratio indicates a nation’s capacity to control its debt while sustaining robust economic expansion.
Successfully maintaining low debt-to-GDP ratios has allowed several African countries to benefit from increased FDI, more fiscal flexibility, and improved public services. On the other hand, nations with high debt ratios are frequently compelled to take out further loans, which lead to a vicious cycle of debt dependence.