The Coordinating Assembly of Non-Governmental Organisations (CANGO) in Eswatini has expressed concerns over the government's plan to borrow E3.79 billion, warning that the move could exacerbate the country's financial situation. CANGO Executive Director Thembinkhosi Dlamini stated that the impending El Niño drought could weaken the economy, making loan repayments more challenging. He emphasized that borrowing heavily ahead of a possible drought could put additional pressure on government finances.
The Eswatini government is seeking to borrow E3.79 billion through three loan bills tabled by Minister of Finance Neal Rijkenberg in the House of Assembly. The proposed borrowing arrangements include obtaining up to E1.6 billion from Standard Bank of South Africa Limited and other lenders to finance infrastructure and social development projects. The loan bill, published in the Eswatini Government Gazette Extraordinary No. 91 dated October 29, seeks to authorize the minister to raise a loan not exceeding E1.6 billion.
Dlamini cautioned that the possible effects of El Niño should be considered carefully before the government commits itself to additional debt. He explained that the effects of drought could spread beyond farming, affecting government revenue, businesses, and the livelihoods of rural communities. The country's economy, which relies heavily on agriculture and downstream manufacturing, could experience significant consequences if harvests fail.
The proposed loan comes at a time when Eswatini's public debt has reached E43.04 billion, accounting for 41.63% of the country's gross domestic product (GDP). As of September 29, the public debt comprised E22.82 billion in domestic borrowing and E20.22 billion in external debt. CANGO has raised concerns over the government's management of public resources, emphasizing that increased borrowing and public expenditure must translate into tangible improvements in people's lives.
CANGO's concerns are echoed by the persistent challenges facing the country, including poverty, unemployment, and shortages of essential medicines. Dlamini identified these issues as requiring urgent attention, stating that the greatest challenge remains translating commitments into tangible improvements in people's lives. The organization warns that borrowing during or immediately before economic shocks creates a double squeeze, with government facing declining revenue while debt service obligations remain fixed.
The Standard Bank loan bill, 2026, published in the Eswatini Government Gazette Extraordinary No. 91, outlines the financial obligations, including interest payments, arranging fees, and annual facility management charges. The funds would finance infrastructure and social development projects agreed upon by the government and the arranger, as well as other eligible social expenditure and related costs.
As the government moves forward with its borrowing plans, CANGO's warnings highlight the need for careful consideration of the potential risks and consequences. The country's economic situation, coupled with the threat of El Niño, underscores the importance of prudent financial management and the need for transparent and accountable use of borrowed funds.
Key points
- CANGO warns Eswatini government against new debt amid El Niño threat.
- Eswatini's public debt reaches E43.04 billion, accounting for 41.63% of GDP.
- Proposed loan aims to finance infrastructure and social development projects.
