- about 25% of allocated E850 million finds way back to government coffers
BY THEMBA ZWANE
MBABANE – Government recovered no more than E200 million in taxes from the massive July salary review back-pay exercise for civil servants, after setting aside E850 million to settle outstanding arrears, Minister of Finance Neal Rijkenberg has revealed.
In an interview with Eswatini Positive News on Friday morning, Rijkenberg said only about 25 per cent of the E850 million allocated for the July salary review back-pay exercise found its way back into Government coffers through tax deductions.
The minister explained that this translated to tax receipts of between E100 million and E200 million, significantly lower than the total amount paid out to public servants.
“Government received about 25 per cent of the allocated E850 million budget for the July salary review payback exercise. In taxes, that means Government received between E100 million and E200 million,” he said.
The disclosure provides the clearest indication yet of how much of the once-off payment returned directly to the fiscus after thousands of civil servants received their long-awaited salary review arrears in July.
The July payment, popularly dubbed the “Dvuladvula” payback by many civil servants because of its size, marked one of the largest single payroll disbursements made by Government in recent years.
The E850 million payment settled the remaining 85 per cent of salary review back pay owed to public servants following the implementation of Government’s salary review programme. An initial 15 per cent of the arrears had already been paid, with the July payment clearing the outstanding balance.
Government had announced months earlier that it would honour the commitment despite facing cash-flow constraints.
Speaking during the Finance in Focus programme ahead of the July payment, Rijkenberg confirmed that E850 million had been ring-fenced specifically for the salary review back pay.
At the time, he explained that the money would come from the Kingdom’s quarterly Southern African Customs Union (SACU) revenue receipts, with Government expecting approximately E2.9 billion in SACU transfers during the first week of July.
The minister said the anticipated customs revenue would enable Government to meet one of its biggest financial obligations of the year without derailing other priority expenditure.
The total cost of the salary review was estimated at approximately E1.29 billion, making it one of the most significant financial commitments undertaken by Government in recent years.
Friday’s revelation sheds new light on the fiscal impact of the exercise, indicating that while Government spent E850 million to settle the outstanding arrears, only a fraction of that amount immediately flowed back to the Treasury through income tax collections.
The disclosure also illustrates the scale of disposable income that remained in the hands of civil servants after statutory deductions, with the majority of the back-pay package entering the wider economy through household spending, debt repayments, savings and investment.
The July payout was widely welcomed by public servants, many of whom had waited months for the settlement of the outstanding salary review arrears. The payment injected hundreds of millions of emalangeni into the economy, boosting activity across several sectors as beneficiaries met financial obligations and increased consumer spending.
Economists have previously noted that large public-sector payouts tend to stimulate short-term economic activity by increasing demand for goods and services, although the direct fiscal return to Government is generally limited to statutory deductions such as Pay-As-You-Earn (PAYE) tax.
Rijkenberg’s latest comments therefore suggest that Government’s immediate financial recovery from the exercise was confined largely to tax collections amounting to between E100 million and E200 million.
The minister’s remarks come as Government continues to balance competing expenditure pressures while maintaining commitments to public sector employees and funding essential public services.
Despite ongoing fiscal pressures, Government honoured its undertaking to clear the outstanding salary review arrears in July, fulfilling a pledge that had been closely watched by thousands of civil servants across the country.
The latest figures provide the first public estimate of the tax revenue generated directly from the exercise, offering insight into how much of the record E850 million payout returned to the fiscus after reaching employees’ bank accounts.
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