THE unpredictable Southern African Customs Union (SACU) receipts in the country will have a negative impact on the country’s foreign reserves.

Southern African Research Foundation for Economic Development (SARFED) Regional coordinator George Choongwa said the fiscal situation of the country was unpredictable mainly because of the continuous decline in SACU receipts and other external forces. 

He said this would have an indirect impact on the socioeconomic status of an average Swazi with high cost of living due to reduced level of incentives such as subsidies in concurrence of the projected two years economic downturn. “The long term expected impact would be a reduction in capital projects and reduced foreign reserves which would negatively affect the government spending.  “Adding, the degree of indicator predictability perpetrates that since the decline in revenue due to 2011 economic crisis, government has engaged several provisions that have continued to mitigate the impact,” he said when commenting on His Majesty King Mswati III’s speech he delivered during the official opening of the second session of the 10th parliament.

Meanwhile, the King said the highly unpredictable SACU revenues remained one of the biggest challenges in the country.  He said SACU receipts continued to present a critical challenge to the country’s fiscal sustainability and this would remain one of the biggest challenges of the times. The King said the solution was to save for rainy days during good years whilst carefully investing in critical infrastructure projects. He said this would be critical for growing the economy and diversifying Swaziland’s revenue base.

“The nation is aware that we are still faced with a risk of declining SACU revenues over the next two years, at the very least.  “This would require us to invoke all the lessons we learnt in the past financial crisis.  “Greater fiscal discipline will also be needed, both in the way resources are allocated and utilised,” he said.

He said they were pleased that this was what government has been doing since the fiscal crisis that ended in 2011.  The King said government has progressively increased the country’s reserves to around four months of imports from two months in March, 2012.   On another note, Choongwa said Swaziland has introduced several revenue incentives of which have simulated a positive indication of improved average social status and national performance. These were; improved government accountability for service delivery and cost-effective socioeconomic monitoring system, increased consumer purchasing power parity, improved standard of living and reduced cost of living. 

However, he said government would have to intensify on public information sharing platform and establish systems such as boarder trade aided system in order to reduce social costs like tax inversion and tax non-compliance.