This follows the IMF Executive Board’s completion of its Article IV Consultation with Eswatini. The review shows growth slowed to 2.8% in 2024, down from 3.4% the previous year, largely due to weaker external conditions. Inflation eased to an average of 4%, helped by lower food and utility costs, while the external current account surplus fell to 1.3% of gross domestic product (GDP) from 2.4% in 2023.

The fiscal deficit widened to 1.3% of GDP in 2024 despite record Southern African Customs Union revenues, while public debt rose moderately to 39.2% of GDP. The IMF noted, however, that borrowing costs remain higher than those of neighbouring countries, reflecting increased risk perceptions.

The kingdom also faces deep-seated social pressures. Unemployment remains high at 34%, with youth unemployment at 58%, while inequality is among the starkest in sub-Saharan Africa, underpinning a poverty rate of 59%.

Growth is expected to pick up to 4.3% in 2025 and 4.% in 2026, driven by domestic public and private capital projects, before slowing to around 2.8% in the medium term without decisive reforms.

IMF Directors welcomed the government’s plans for fiscal consolidation, stressing the need to strengthen domestic revenue mobilisation and pursue civil service and state-owned enterprise reforms to contain debt and create space for social and development spending. They also highlighted ongoing reforms in public financial management, calling for faster implementation to boost efficiency and reduce arrears.

The IMF advised careful alignment of interest rates with those of the South African Reserve Bank to support the lilangeni’s peg and preserve reserves, alongside modernising the monetary framework and safeguarding central bank independence.

To generate jobs and sustainable growth, Directors urged Eswatini to improve the business climate, close infrastructure and skills gaps, and continue strengthening governance and anti-money laundering systems.

–IMF/ChannelAfrica–