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IMF puts SD’s growth at 0.4%

Business Section

By FAITH SHONGWE - SWAZI TIMES-20-Jul-2009

MBABANE – Although the country’s Gross Domestic Product (GDP) is expected to decline sharply this year, the IMF projects it will remain positive at 0.4 per cent.

The IMF believes that this is largely due to a contraction in manufacturing and mining, and a rebound in sugar production. IMF is an acronym for the International Monetary Fund.

According to reports sourced from the internet, IMF staff mission led by the IMF Mission Chief for Swaziland, Norbert Toé paid a courtesy visit to Prime Minister Barnabas Sibusiso Dlamini, Minister of Finance Majozi Sithole, Minister of Economic Planning and Development Prince Sihlangusemphi, Central Bank of Swaziland (CBS) Governor Martin Dlamini, senior government officials and members of the donor community and the private sector last week to review recent economic developments and discuss the impact of the global downturn on the Swazi economy and the authorities’ policy response.

crisis Sithole confirmed the courtesy visit, saying the projection made by the IMF was a reflection that the global economic crisis was affecting the Swazi economy negatively. “Yes, the IMF was here from July 8, 2009 and they were expected to leave yesterday (Thursday). During their stay, they looked at the country’s economic figures, which we made readily available and they did their own projections on the country’s economic status. They noted that even though the country’s growth rate will decline this year, it will remain positive at 0.4 per cent,” Sithole explained.

projection Asked on how government viewed this projection, as government’s projections for 2009 indicates that growth will be less than two per cent this year, Sithole said this was just an IMF projection and that it remained to be seen if this projection would actually be realised.

“The IMF also noted that the growth rate for many countries will decline this year because of the global economic crisis, but they have also noted that despite this, the country’s growth rate will remain positive,” he added. The report sourced from the Internet says Toé said Swaziland was adversely affected by the second round effects of the global economic downturn, albeit to a lesser extent than similar small open economies.

“Real GDP growth in 2009 is projected to decelerate sharply, but remain positive at 0.4 percent, largely on account of a contraction in manufacturing and mining, and a rebound in sugar production. Inflation is projected to decline to single digits as pressures related to food price increases in 2008 subside. Rising transfers from the Southern African Customs Union (SACU) enabled the Central Bank of Swaziland to accumulate international reserves,” reads the report in part.

It goes on to say Toé noted that the country’s fiscal position, which recorded a surplus during the 2008/2009 financial year was expected to swing into a deficit this current fiscal year (April 2009 to March 2010) on account of escalating expenditures and a decline in SACU revenue. mission “While some fiscal loosening to support domestic demand in the face of the significant weakening of economic activity in Swaziland may be warranted, the mission stressed the need to maintain fiscal sustainability over the medium term through appropriate revenue and expenditure policies. Stepped up domestic revenue mobilization efforts should include fully operationalising the revenue authority and implementing a value-added tax to broaden the tax base,” reads the report in part. It further says Toé noted that cuts in expenditure would also need to be undertaken while allowing for additional spending on education, health, and other priority programmes.


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