The Executive Board of the International Monetary Fund (IMF) has concluded its 2025 Article IV Consultation with the Kingdom of Eswatini, noting both progress and ongoing challenges in the country’s economic outlook.
Eswatini’s economic growth slowed from 3.4 percent in 2023 to 2.8 percent in 2024. Inflation, as measured by the Consumer Price Index (CPI), averaged 4 percent in 2024, mainly due to lower housing, utilities, food, and beverage costs. The external current account surplus narrowed to 1.3 percent of GDP in 2024 from 2.4 percent the previous year. Gross international reserves at the end of 2024 remained below the IMF’s reserve adequacy metric. The fiscal deficit widened to 1.3 percent of GDP in 2024 despite high revenues from the Southern African Customs Union (SACU). Public debt was moderate at 39.2 percent of GDP for FY24/25, but borrowing costs were higher than those faced by neighboring countries.
The IMF highlighted persistent social and economic issues in Eswatini. Unemployment remains high at 34 percent overall and reached 58 percent among youth in 2023. Income inequality is among the highest in sub-Saharan Africa, contributing to a poverty rate of about 59 percent as of 2023.
Looking ahead, growth is projected to increase to 4.3 percent in 2025 and further to 4.6 percent in 2026, driven by domestic public and private capital projects. However, without significant structural reforms, growth is expected to slow back to around 2.8 percent over the medium term. CPI inflation is forecasted to decline slightly to an average of 3.5 percent in 2025 but may rise again in 2026 due to higher electricity tariffs.
Risks remain tilted downward, including potential global growth slowdowns—especially if they affect South Africa—and possible increases in oil prices. Upside risks could come from faster global growth or improved foreign direct investment and investment implementation.
Executive Directors welcomed Eswatini’s improved near-term outlook but stressed that “Eswatini continues to face serious economic and social challenges.” They emphasized maintaining prudent macroeconomic policies and accelerating structural reforms with technical assistance support “to foster stronger, inclusive, private sector-led growth.”
Directors supported planned fiscal consolidation efforts and commended authorities’ commitment “to contain public debt and reduce government financing pressures,” highlighting the need for fiscal discipline given volatile SACU revenues. They called for strengthening domestic revenue mobilization as well as civil service and public enterprise reforms “to create space for social and development spending.” Ongoing public financial management reforms were welcomed; Directors recommended accelerating these efforts “to improve efficiency of public spending and investment, reduce arrears, and limit transfers to public enterprises.”
On monetary policy, Directors noted the narrowing interest rate differential with South Africa’s Reserve Bank as a step toward stemming capital outflows and supporting Eswatini’s pegged exchange rate regime. They advised careful calibration of policy rates against those set by South Africa’s central bank, strengthening reserve buffers, modernizing monetary policy frameworks, enhancing central bank independence, and limiting cash advances from the central bank to government.
Financial sector initiatives were also discussed positively by Directors who said they “welcomed ongoing financial sector initiatives” related to recommendations from a Financial Sector Stability Review. They stressed updating financial oversight legislation and operationalizing both an Emergency Liquidity Assistance facility and a deposit insurance scheme.
To promote private sector-led growth and employment generation, Directors recommended improving Eswatini’s business environment while addressing skill gaps and infrastructure needs. Progress on anti-money laundering/countering financing of terrorism (AML/CFT) frameworks was acknowledged along with calls for continued improvement on governance frameworks as well as data quality.
Eswatini's main exports are beverages, sugar, and textiles with key markets including South Africa, Kenya, and Mozambique; its population was estimated at about 1.2 million people in mid-2024.
Under Article IV consultations—held annually—the IMF engages bilaterally with member countries through staff visits that include discussions on economic developments before preparing reports for review by its Executive Board.
At the conclusion of such reviews: "the Managing Director, as Chair of the Board summarizes the views of Executive Directors," which are then communicated back to national authorities.