By Judith Ugwumadu | 23 July 2014

Swaziland must strengthen its public financial management to improve the efficiency of government spending and boost growth, the International Monetary Fund has said.

It also urged the southern African nation to ensure that public investments were well managed.

The IMF said Swaziland faces significant challenges and noted that, although growth has bounced back following the 2010/11 crisis, long-term growth trends remain low. Real gross domestic product growth in Swaziland has averaged 2% since 2004.

Comprehensive structural reforms were needed to address this long-standing problem of weak growth.

‘The weak growth performance has been largely associated with a low multiplier of fiscal spending and low private sector development (depressed private investment in particular),’ said the IMF.

‘The authorities should improve the efficiency of spending, through strengthening PFM and public investment management and allocating higher weight to growth-promoting capital expenditure.

‘Furthermore, it is also essential to promote sector-led, inclusive growth. In particular, enhanced steps should be taken to further improve business climate, facilitate intermediation and pursue land management reforms.’

The IMF noted that if Swaziland’s fiscal deficits increased substantially, as predicted under the medium-term fiscal framework, the government’s large financing needs would likely crowd out private sector credit, further squeezing private sector development.

The new government was urged to step up efforts to implement reforms, seeking technical assistance from Swaziland’s international partners, as needed.

Earlier this year, the African Development Bank said it would work with Swaziland to help it strengthen PFM and make better fiscal adjustments following the sharp decline in revenues from the Southern African Customs Union.