The World Bank and the Government of Eswatini have released a new review aimed at improving fiscal policy in Eswatini. Titled "The Eswatini Public Finance Review (PFR): Leveraging Fiscal Adjustment for Better Development Outcomes," this is the first such review for the country since 1996.
The review seeks to enhance public spending efficiency and revenue mobilization, promoting sustainable economic growth. It offers a detailed analysis of Eswatini's fiscal policy and its impact on economic growth and livelihoods. The document acknowledges the country's post-pandemic recovery, with an average growth rate of 5.3% from 2021 to 2023, but emphasizes the need for reforms to achieve broader economic progress.
Eswatini’s Minister of Finance, Honorable Neal Rijkenberg, stated, “The Government has made significant progress since 2019 in reducing the fiscal deficit and implementing fiscal adjustment measures. Notwithstanding, stepped-up efforts are needed to implement some of the critical reforms highlighted in the Public Finance Review.”
Key areas identified for improvement include prudent fiscal management to support macroeconomic stability and external competitiveness. Enhanced revenue mobilization through better tax administration is deemed crucial. The review also calls for strengthened public financial management to maximize value-for-money and suggests integrating climate considerations into public investment management.
Eswatini could enhance economic efficiency by addressing expansionary fiscal policies, eliminating expenditure arrears, and adjusting wage disparities between public and private sectors. Improvements in tax administration could boost revenue by up to 3.3% of GDP through specialized units for high-net-worth individuals and increased electronic tax filing.
In terms of public financial management, recommendations include improving budget preparation and execution, reforming state-owned enterprises, and streamlining procurement processes via electronic solutions. The health sector requires attention through better expenditure management and improved access to quality primary care.
Satu Kahkonen, World Bank Country Director for Eswatini, emphasized the importance of strategic fiscal policy: “Eswatini’s future hinges on its ability to leverage fiscal policy strategically. By implementing the reforms outlined in the Public Finance Review, Eswatini could create a more competitive and resilient economy, fostering inclusive growth and improving the lives of all Emaswati."
The World Bank pledges technical assistance and financial support to guide Eswatini towards achieving fiscal sustainability and inclusive growth.