BY MBONGENI NDLELA
LOBAMBA – The Eswatini Treasury Department has released its Annual Financial Report for the year ending March 31, 2024, highlighting key fiscal policies, revenue collection trends, government expenditure, and financial challenges faced over the period.
The report, signed by Accountant General Nomsa Simelane, offers an in-depth review of the country’s financial position and the progress of public financial management reforms.
Revenue performance and collections
The government recorded a total revenue of E25.83 billion in the 2023/24 fiscal year, an increase of 36.3% compared to the previous year’s collection of E20.03 billion. The rise in revenue was attributed to improved tax collections, Southern African Customs Union (SACU) receipts, and non-tax revenue streams.
Major Revenue Sources:
- SACU receipts: E10.64 billion
- Income tax: E7.11 billion
- Excise and customs duties: E11.76 billion
- Other taxes and sundry fees: E2.88 billion
Simelane emphasized that the surge in SACU revenues helped stabilize government finances, but warned against reliance on volatile external revenue sources.
“SACU revenues remain unpredictable. It is essential that we diversify our revenue base to ensure long-term fiscal sustainability,” Simelane stated.
Government expenditure and budget performance
Total government expenditure for the year stood at E26.5 billion, comprising recurrent expenditure (74%), capital projects (16%), and statutory expenditure (10%).
Breakdown of major expenditure:
- Education sector: E3.84 billion
- Health services: E2.44 billion
- Infrastructure development (Public Works & Transport): E1.39 billion
- Security forces (Police, Defence, Correctional Services): E3.56 billion
- Statutory obligations: E2.64 billion
Despite efforts to maintain fiscal discipline, the government overspent by E300 million (1.4%), primarily due to rising costs in the security sector, infrastructure maintenance, and salary adjustments for public servants.
“We remain committed to controlling expenditure while ensuring that critical services are not compromised,” Simelane assured.
Public debt and fiscal sustainability
Eswatini’s total public debt increased to E34.6 billion, equivalent to 38.7% of the Gross Domestic Product (GDP). While the country remains within international and regional debt sustainability thresholds (50% of GDP), concerns over rising debt servicing costs were raised.
Debt Composition:
- External Debt: E15.8 billion (17.7% of GDP)
- Domestic Debt: E18.8 billion (21% of GDP)
- Key Creditors: African Development Bank (AfDB), International Monetary Fund (IMF), World Bank, Exim Bank of China
The Treasury Department emphasized the need for fiscal discipline and efficient debt management, ensuring that borrowing remains sustainable and focused on development projects rather than recurrent spending.
Public financial management reforms
To enhance transparency, accountability, and efficiency, several reforms were implemented during the year:
- Integrated Financial Management System (IFMIS): Improved monitoring and reporting of public funds.
- Treasury Single Account (TSA): Streamlined cash management processes.
- International Public Sector Accounting Standards (IPSAS): Adoption of global best practices in government financial reporting.
- Arrears Management Program: Reduced outstanding government obligations to service providers.
Simelane acknowledged that while these reforms have improved financial governance, challenges such as slow reconciliation processes and manual accounting systems persist.
Challenges and Financial Risks
The report identified key challenges affecting financial performance, including:
- Cash Flow Constraints: Delayed payments to suppliers due to liquidity shortfalls.
- Over-Expenditure in Certain Ministries: Security, infrastructure, and statutory obligations exceeding budgeted limits.
- Delayed Revenue Collections: Inefficiencies in tax collection mechanisms and dependency on SACU.
- Storage and Record-Keeping Issues: Lack of adequate space for financial document storage, increasing risks of data loss.
Future outlook and recommendations
Looking ahead, the Treasury Department is focusing on diversifying revenue sources, strengthening expenditure controls, and improving debt sustainability.
Key Recommendations:
- Expand Domestic Revenue Streams: Reduce reliance on SACU receipts by boosting local industries and tax reforms.
- Strengthen Financial Discipline: Implement stricter expenditure controls to prevent over-expenditure.
- Invest in Digital Financial Systems: Modernize the Treasury Accounting System to reduce manual errors.
- Enhance Public-Private Partnerships: Encourage private sector involvement in infrastructure projects to ease the fiscal burden.
“We remain committed to ensuring prudent fiscal management while prioritizing economic growth and social development,” Simelane concluded.
Conclusion
The 2024 Treasury Annual Report provides a comprehensive review of Eswatini’s fiscal health, revenue performance, and expenditure trends. While significant progress has been made in public financial management, continued vigilance in expenditure control, debt management, and revenue diversification will be crucial for ensuring long-term economic stability.
