Ezulwini – The Central Bank of Eswatini (CBE) has raised concerns of the country’s fiscal position becoming increasingly fragile with deeper structural pressures, rather than short-term shocks, driving the widening deficit and heightening long-term financial vulnerabilities.
Speaking at the 2025 financial stability reflection at the CBE complex on Monday, Governor Dr Phil Mnisi said that while public-sector salary reviews and security forces’ wage adjustments have contributed to expenditure growth, they form part of a much broader pattern of rising structural costs that the government will struggle to sustain without significant reforms.
Total government expenditure is projected to rise by 8.5% to E32.61 billion, outpacing expected revenue growth of 7.7% to E29.73 billion.
A sharp 20.4% decline in SACU receipts, down to E10.4 billion, has further tightened fiscal space, underscoring Eswatini’s continued dependence on external revenue sources.
“As a result, the fiscal deficit is projected to widen to E2.88 billion, or 3% of GDP. Persistent deficits continue to erode contingency buffers, increase borrowing needs, and raise sovereign liquidity risks, with potential spillovers to the banking sector,” Dr Mnisi warned.
Beyond the headline deficit, Mnisi stressed that Eswatini’s fiscal trajectory is becoming increasingly risky as public debt rises faster than the economy can absorb. Debt reached 40.3% of GDP by June 2025, up from 38.6% the previous year, driven largely by domestic borrowing, which climbed to 21.6% of GDP.
Major infrastructure commitments, including the Phuzumoya Oil Reserve, continue to expand financing requirements and raise rollover risks.
Mnisi cautioned on an expanding public debt burden which could crowd out private-sector lending, pushing up borrowing costs and weakening economic competitiveness.
The looming possibility of the non-renewal of AGOA adds another layer of vulnerability. While AGOA-linked exports account for less than 10% of total exports, the CBE noted that the manufacturing sector, especially textiles and apparel faces potential disruptions. Such trade shocks could slow foreign-currency inflows, placing additional pressure on the exchange rate and the financial system’s liquidity buffers.
To mitigate these risks, the CBE urged diversification into agro-processing, renewable energy and ICT, along with stronger engagement within African trade blocs.
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