Table of Contents
Economics Research International
Volume 2015 (2015), Article ID 435639, 10 pages
http://dx.doi.org/10.1155/2015/435639
Research Article

Assessing Swaziland’s Fiscal Sustainability and Policy Options

Transition Support Department, African Development Bank, Abidjan, Côte d’Ivoire

Received 22 July 2015; Accepted 18 October 2015

Academic Editor: David E. Giles

Copyright © 2015 Albert Mafusire. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

In 2011, Swaziland’s fiscal policy was extensively scrutinized following its worst fiscal crisis in decades. The impacts of fiscal adjustment on Swaziland’s growth, inflation, and sectoral allocations of resources were some of the issues analyzed. The fall in the Southern African Customs Union revenue receipts to levels below the trend line, for two consecutive years, and the fiscal challenges that followed were the main motivation behind this interest. This paper attempts to establish whether fiscal sustainability was threatened, and if so what were the policy options? Based on the results from econometric estimations, using a sample for the 1986 to 2012 period, I show that the country’s fiscal sustainability was not threatened. However, calculations of the tax gap and the primary gap covering the period 2000 to 2016 reveal that fiscal sustainability was threatened. Subject to the major drivers of government expenditure and revenue handles, it is concluded that, in the short run, the two needed to be realigned while also allocating more resources to support growth.