Swazi bailout an effort to avoid repeat of Zimbabwe

2011-08-06 16:58

South Africa had no choice but to lend its neighbour Swaziland R2,4 billion to avoid a repetition of the situation in Zimbabwe, where the internal melt-down has forced many Zimbabweans to flee to South Africa, government officials said in Pretoria.

South Africa has come under heavy criticism for granting the loan to the monarchy.

Both South ­Africans and Swazis fear the money will help fund the king’s lavish lifestyle instead of helping poor citizens.

“Look, we couldn’t just stand by and watch – just think ­Zimbabwe,” said a senior government official this week.

“Those people will flock here and then we’ll have the same crisis as with Zimbabwe.”

After months of speculation, Finance Minister Pravin Gordhan this week announced that South Africa had agreed to lend Swaziland the R2,4 billion to boost its economic activity and institute measures that would help it access other funding.

Swaziland is expected to use the money to pay civil servants’ salaries and for other urgent needs.

But most conditions attached to the loan insist on structural economic reform rather than ­political reform – which is what Swazi and South African civil society groups have been calling for.

South Africa has repeated conditions ­attached to a 2004 agreement – which wasn’t honoured – concerning broadening the ­political process.

Conditions on accounting for how the money will be spent have been tightened, and the Swazi parliament has been compelled to ­table the Public ­Finance Management Bill in ­October and implement ­“acceptable financial ­reporting”.

According to government ­insiders involved in the talks, King Mswati III was initially ­resistant to his government ­being made accountable for how it spent the money.

“Initially, there was some ­resistance on the part of the king, but there was also desperation on his part – which is why he eventually gave in,” the insider said, explaining why the loan negotiation process took so long to be finalised.

A task team composed of the World Bank, the International Monetary Fund, the National Treasury and the African Development Bank will help implement and measure the progress of the ­reforms – thus eliminating the excuse that there is a lack of ­capacity in the Swazi ­government.

South Africa has also ensured that there is no risk of the money not being repaid.

Repayments will be made through the Southern African Customs ­Union, whose common revenue pool it manages.

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