An International Monetary Fund (IMF) staff team led by Xiangming Li visited Mbabane from July 24 to August 6, 2025, to conduct the 2025 Article IV Consultation with Eswatini’s authorities. The visit aimed to assess the country’s economic outlook and policy priorities.
At the end of the mission, Ms. Li stated that Eswatini’s economic growth is expected to rise from 2.8 percent in 2024 to 4.3 percent in 2025 due to large public and private investment projects. She noted that “Risks to this outlook include heightened global uncertainty and potential delays in project execution. Growth is projected to gradually ease over the medium term to 2.8 percent, close to the long-term average. Inflation is expected to moderate to 3.5 percent in 2025 from 4.0 percent in 2024 and broadly track South Africa.”
Ms. Li highlighted fiscal challenges: “The structural primary deficit, which excludes Southern African Customs Union (SACU) revenues, widened by 1.1 percent of GDP in FY24/25. This year, the structural primary deficit will be tightened by 1.8 percent of GDP, which is appropriate to rein in rising debt. However, because of a large decline in SACU revenue and higher interest payments, the overall deficit is projected to increase to 4.7 percent of GDP, compared with 2.3 percent of GDP in FY24/25. Public debt is projected at 42.9 percent owing in part to the regularization of arrears.”
Financing costs for Eswatini have been high compared with similar South African instruments, as government securities spreads reached up to nearly four percentage points above those benchmarks recently. In July, Eswatini issued bonds worth R600 million on the Johannesburg Stock Exchange at a rate comparable with domestic issues while increasing borrowing from international financial institutions.
Ms. Li explained future plans: “Over the next six years, the government appropriately plans to reduce the structural primary deficit by 1.9 percent of GDP, stabilizing the public debt-to-GDP ratio at 42.8 percent by mid-2031.” She added that achieving these targets depends on controlling spending on goods and services as well as reforms affecting grants and wages.
She also stressed that “The expeditious implementation of ongoing public financial management (PFM) reforms will be essential,” citing initiatives such as an Integrated Financial Management Information System and amendments aimed at improving public investment management.
On monetary policy developments, Ms. Li said: “On August 1, the Central Bank of Eswatini kept its policy rate at 6.75 percent... This effectively narrowed the policy rate differential with South Africa...” Aligning rates could help maintain currency stability given low reserves.
Financial sector buffers are described as adequate but require ongoing monitoring; legislative updates and new regulations are seen as necessary for stability.
To support long-term growth and address unemployment or inequality concerns, Ms. Li recommended actions including infrastructure improvements, regulatory streamlining for business activity, SOE reform efforts, expanded credit access for businesses or individuals, stronger governance practices across sectors, and better technical or vocational training opportunities.
She concluded: “The mission thanks the authorities for their excellent cooperation and warm hospitality.”