Eswatini Government Seeks E8.2 Billion in New Financing

The Eswatini government is seeking to raise E8.2 billion in new financing to address its financial shortfall and improve cash flow. This financing plan, disclosed in the 2026/27 Mid-Year Budget Review, aims to cover the budget deficit and provide resources to settle outstanding payments owed to domestic suppliers and contractors. According to the Ministry of Finance, clearing these arrears will improve liquidity in the local economy and rebuild confidence among businesses that provide goods and services to the State.

The proposed financing will be raised through budget-support loans and the Johannesburg Stock Exchange (JSE). However, the Ministry of Finance has not specified the amount government intends to raise through the JSE or the terms of the proposed issuance. These details would determine the borrowing costs, repayment obligations, and the extent to which the financing would add pressure to future budgets. The JSE is one of Africa's major financial markets, providing a platform through which governments and businesses can raise capital.

The proposed financing comes amid substantial debt repayments. Government reported total public debt service of E11.9 billion during the first half of the financial year. Domestic debt service accounted for E10.8 billion, including the repayment of a E4.1 billion Central Bank advance. External debt service amounted to E1.2 billion. The review separately identifies E590.4 million in external debt repayments. These figures demonstrate the scale of government's financial obligations beyond routine expenditure on salaries, goods, and services.

The Ministry of Finance says improved financial management and tighter commitment controls are necessary to prevent further accumulation of arrears. It also acknowledges that borrowing costs and tight financing conditions remain major risks to the country's financial outlook. The proposed E8.2 billion financing package could provide immediate relief to government and businesses awaiting payment. However, the review leaves unanswered questions about its composition, borrowing costs, and the timetable for settling outstanding obligations.

In a related development, government collected E700 million more in Pay-As-You-Earn (PAYE) taxes during the first half of the financial year. PAYE collections increased from E2.5 billion during the corresponding period last year to E3.2 billion, representing a 28 per cent increase in revenue collected through the tax on employees' earnings. In contrast, company tax collections fell from E1.2 billion to E992 million, a decline of E208 million or approximately 17.3 per cent.

The 2026/27 Mid-Year Budget Review shows that income tax is the largest contributor to domestic revenue. Combined collections from company tax, PAYE, graded tax, and other income taxes reached E4.7 billion during the first six months. This compares with E4.3 billion during the same period in 2025/26. Government expects total income tax collections to reach E9.9 billion by the end of the financial year. Overall domestic revenue collections reached E8.2 billion, compared with E7.7 billion during the corresponding period last year.

The Ministry of Finance expects domestic revenue to increase over the medium term through improved collection efficiency, digitalisation, and tighter compliance. Taxes on goods and services remained the second-largest source of domestic revenue, with Value Added Tax (VAT) collections reaching E2.8 billion, representing 46 per cent of the E6 billion annual projection. However, VAT and company tax are among the revenue categories that performed below their corresponding previous-year levels.

Key points

• The Eswatini government plans to raise E8.2 billion in new financing to address its financial shortfall and improve cash flow.
• The proposed financing will be raised through budget-support loans and the Johannesburg Stock Exchange (JSE).
• Government collected E700 million more in Pay-As-You-Earn (PAYE) taxes during the first half of the financial year.