An IMF team led by Xiangming Li visited Mbabane from July 23 to August 5 for discussions on the 2026 Article IV Consultation with the Kingdom of eSwatini.
Li said real gross domestic product (GDP) growth accelerated to 4.9% in 2025, supported by large public and private investment projects. However, unemployment remains high at 33.5%.
Growth is expected to slow in 2026 because of higher fuel costs, weaker global demand, tighter financing conditions, weather-related disruptions and easing investment activity.
Inflation moderated in 2025 and continued to decline in early 2026 before rising to 2.6% in June. The IMF expects higher fuel prices to push up average inflation for the year. “The outlook is subject to significant downside risks,” Li said.
Li said a prolonged conflict in the Middle East could raise fuel and fertiliser prices, weaken external demand and increase fiscal pressures. Climate shocks, particularly drought and erratic rainfall, could also disrupt agriculture, increase food prices and worsen poverty.
eSwatini’s external position improved modestly in 2025, with the current account surplus widening from 2.1% of GDP in 2024 to 2.4%. However, gross international reserves remained low at 2.5 months of imports at the end of 2025.
The IMF said the current account surplus is expected to narrow because of higher fuel costs and strong investment-related imports.
The fiscal deficit rose sharply to 6.1% of GDP in the 2025/26 financial year, from 1.1% the previous year, largely because of public wage increases and higher public investment. Public debt increased from 40% of GDP to 44.7%.
The 2026/27 budget deficit is expected to narrow slightly to 5.9% of GDP, while public debt is projected to reach 50% of GDP by the end of the financial year.
Li said Cabinet’s Medium-Term Fiscal Framework envisages consolidation to reduce debt vulnerability, with public debt expected to peak above 52% of GDP before declining to about 45% by 2031/32.
The IMF recommended further rationalisation of recurrent spending, stronger public financial management, faster rollout of the Integrated Financial Management Information System and e-procurement, and improved financial discipline at public enterprises.
The Central Bank of eSwatini has kept the policy rate at 6.75% since May 2025. The IMF said the bank should monitor developments closely and be ready to act to protect the exchange rate peg.
Li said structural reforms remain essential to diversify the economy, create jobs, accelerate digitalisation and support responsible use of artificial intelligence.
–IMF/ChannelAfrica–
