By Phiwa Sikhondze
Eswatini’s government spent nearly half of its E29.4 billion annual budget within the first six months of the 2024/25 fiscal year, according to the Mid-Term Budget Review presented by Finance Minister Neal Rijkenberg in Parliament on November 13, 2024.
The report reveals that total expenditure stood at E13.7 billion, marking a 46% execution rate.
The budget, formulated under the Nkwe mandate aimed at rapid service delivery, faced mounting pressure to meet growing infrastructure needs, public sector wages, and debt servicing.
Despite an increase in government revenue by 1% of GDP compared to last year, expenditures rose by 2%, driven by the costs of new policies and expansion efforts.
Eswatini’s total revenue and grants for the first half of the fiscal year amounted to E13.17 billion, up from E10.95 billion the previous year. The increase was largely attributed to Southern African Customs Union (SACU) receipts, which rose to E13.07 billion, contributing E6.53 billion by mid-year.
Although SACU remains a vital revenue source, its volatility remains a concern, prompting the government to set aside E750 million in reserves for the SACU Stabilization Fund, with plans to save E1.5 billion by year-end.
Domestic revenue reached E7 billion, a rise from E5.7 billion last year, with income taxes and VAT serving as major contributors. Pay As You Earn (PAYE) taxes collected at mid-year amounted to E2.3 billion, representing 55% of the annual target of E5.26 billion. VAT collections stood at E2.43 billion, reaching 50% of the annual forecast of E4.88 billion.
Mid-year government expenditure reached E13.7 billion, representing 15.3% of Eswatini’s GDP. The allocation was primarily toward recurrent costs, amounting to E9.5 billion, while capital expenditures accounted for E2.93 billion, marking a 46% execution rate and improvement over the same period last year.
Personnel costs, particularly due to the 4% cost of living adjustment (CoLA) and ongoing recruitment in the healthcare and education sectors, remain the largest expenditure category.
The wage bill stood at E4.8 billion, equating to 49% of the annual budget. Other expenditure areas included:
- Goods and services: E1.5 billion, 38% of the annual budget of E4 billion
- Transfers to entities and institutions: E2.3 billion, 51% of the annual budget
- Interest payments: E1.25 billion, 54% of the budget allocation for interest payments
Minister Rijkenberg acknowledged that fiscal consolidation remains challenging due to spending demands and cash flow constraints. Rising interest payments, projected to reach E2.6 billion by year-end, are also a concern, especially as they exceed the E2.3 billion budget due to fluctuations in domestic and external markets.
Looking forward, the Ministry of Finance aims to contain expenditures within the E29.4 billion limit, although rising personnel costs, debt servicing, and ongoing projects present risks. To address these, the government plans to strengthen revenue collection and implement additional fiscal measures to achieve a sustainable fiscal balance.