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Central Government Debt Sustainabilty Analysis For A Middle Income Country: An Analysis Of Swaziland’s Debt Situation And Lessons For MEFMI Member Countries

  • June 7, 2016
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  • Category: Debt Management
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By Armstrong Dumisa Dlamini
2008
This section summarizes the contents of all the subsequent chapters, including recommendations made by the study:
The study marks the first attempt to provide background information on the debt sustainability analysis (DSA) following the analysis that was done by the International Monetary Fund (IMF) team in 2005 during the Article IV Consultation;
According to available figures on both external and domestic debt, the country has recorded low debt levels in terms of Gross Domestic Product (GDP) and exports in comparison to other African countries;
On external debt composition, the country has borrowed from all creditor categories, namely; multilateral, bilateral and commercial sources. In terms of currency composition, the country’s external debt is denominated in all major hard currencies;
Since the country has relied on external sources for government development projects, the domestic debt levels have been relatively low and this has translated into few instruments being issued by government in the period 1980 to 2005.
On debt service, the country has also maintained low levels, though the study recommends a review of current practices on sourcing of funds externally with the view of minimizing borrowing from commercial sources;
In line with the debt policy, the study recommends the constituting of the debt coordinating committee which has tremendous benefits for the country;
The study has produced debt ratios on both external and public debt sustainability and these ratios were compared to an indicative threshold of GDP as it is important for the country to monitor these ratios. In addition to this, the study recommends that there is need to monitor liquidity ratios in the case of Swaziland; and
Based on these results, the study recommends the need to implement the structural reforms and macroeconomic policies as prescribed by the IMF. These changes are expected to improve the country repayment capacity and reduce the vulnerability of the country to all shocks. Furthermore, the study recommends the review of the aid policy taking into account the changes surrounding these scarce resources.