Continuous implementation of multi-billion projects such as the Mkhondvo- Ngwavuma Water Augmented Program (MNWAP), as well as the commencement of projects earmarked to support the energy sector such as the solar, biomass and hydro related projects will be the main drivers of growth in the medium-term.
This is according to the recently released Eswatini Medium – Term Economic Growth Forecasts (2023 – 2026). The September 2023 statement was issued by the Minister of Economic Planning & Development, Dr. Tambo Gina.
The Minister notes that the improvement in the government cashflow position will support an acceleration in the implementation of existing projects, as well as the uptake of new projects.
Ongoing projects under implementation include; Lower Usuthu Small-holder Irrigation project II (LUSIP II), the International Convention Centre & Five Star Hotel (ICC-FISH), construction of factory shells and Nhlangano-Sicunusa road amongst others.
New projects on the other hand include the MNWAP. The ministry discloses that the first phase of MNWAP entails the construction of the Mpakeni Dam and supporting infrastructure valued at approximately E2.890 billion. Other new projects include the construction of the parliament building valued at E1.6 billion, and several private sector projects.
The Medium Term Outlook 2024-26 notes that as a result of these projects, economic growth is expected to average 3.3% in this period, with a peak of 4.9% in 2024.
The forecast by the Minister does, however, throw caution to the anticipated economic growth.
“The outer years’ growth will slightly moderate on account of base effects with the anticipated completion of mega-public projects coinciding with the low uptake of newer projects of similar magnitude in consideration of public debt sustainability.”
“The cyclicality of SACU inflows, rising debt levels and interest payments as a share of GDP, will curtail spending on the outer years thereby yielding relatively lower growth outcomes. Private sector investment on the other hand will be conditional on easing financial conditions and improvement in both global and domestic uncertainties.”
The Minister adds that global shocks remain a major risk to the domestic economy’s outlook, given strong trade links with the rest of the world.
“Recurring geopolitical tensions as well as unforeseen outbreaks of pandemics are amongst the recent high risks to growth. Climate change continues to be a threat to agricultural production and other key economic sectors. From a domestic perspective, tightening fiscal space. And any potential delays in the implementation of mega projects form part of the critical risks for the medium-term outlook.”