【世界银行】斯威士兰公共财政审查：利用财政调整取得更好的发展成果-2025_95页_8mb

Eswatini Public Finance Review Summary

Core Content

This document provides an analysis of Eswatini's public finance landscape, focusing on fiscal policy reforms, revenue mobilization, public spending efficiency, and the role of fiscal policy in promoting development outcomes. It outlines the challenges and opportunities for improving macroeconomic stability, external competitiveness, and the effectiveness of public investment and health spending.

Main Points and Key Information

Fiscal Policy and Economic Growth

• Eswatini's growth has been modest since the late 1990s due to a shift from private-sector-led to state-led growth.
• The country's economic growth was high (8% annually) from 1980 to 1994, driven by private investment and strong fiscal policies.
• Post-1994, the economy became increasingly dependent on consumption, leading to slower growth.
• After the pandemic, Eswatini experienced a strong rebound, averaging 5.3% growth from 2021 to 2023.
• The government's fiscal policy has become looser and less effective over time.

Macroeconomic Imbalances

• Public debt reached 45% of GDP in 2022, declining to 40.4% in 2023.
• Public expenditure arrears increased from 2.8% of GDP in 2021 to 4.9% in 2023.
• SACU revenue volatility has contributed to fiscal deficits and public debt accumulation.

Fiscal Adjustment Plan (FAP)

• Launched in 2020, the FAP aimed to reduce the fiscal deficit and improve debt sustainability.
• It included measures such as broadening the revenue base, reducing public wage bill, reforming SOEs, and improving social assistance targeting.
• Despite slow implementation, the FAP marks a shift from unproductive fiscal expansion.

Revenue Mobilization

Key Takeaways

• Eswatini has high tax rates compared to peers, but domestic revenues remain below potential.
• The tax gap was estimated at 5% of GDP in 2022.
• Tax expenditures accounted for nearly 13% of GDP in 2022, up from 10% in 2017.
• The public sector wage premium is high, at about 50%, which limits private sector competitiveness.

Policy Options

• Streamline tax registration and payment procedures.
• Implement electronic tax filing to increase reported taxable income.
• Introduce a property tax to broaden the tax base.
• Reduce tax exemptions and improve tax administration efficiency.
• Lower corporate income tax rates to attract more private investment.
• Establish a Revenue Stabilization Fund to manage SACU revenue volatility.
• Pass fiscal rules to govern savings and spending decisions.

Public Expenditure Management

Key Takeaways

• Public spending accounts for about 30% of GDP.
• Recurrent spending dominates the budget.
• Public employment costs constitute a significant portion of the budget.
• Public financial management (PFM) is weak, contributing to inefficiencies in public spending.
• The execution rates of capital spending have been low, and there are challenges in aligning budget allocations with development priorities.

Policy Options

• Strengthen public financial management to support fiscal consolidation.
• Improve expenditure efficiency by aligning budget allocations with development goals.
• Enhance public procurement systems to improve value for money.
• Reform state-owned enterprises (SOEs) to reduce fiscal burdens and improve performance.
• Address inefficiencies in public service delivery through better oversight and performance monitoring.

Public Investment Management

Key Takeaways

• Public investment is crucial for building productive physical capital.
• Climate considerations need to be integrated into public investment planning.
• Project preparation and implementation procedures are weak and require improvement.
• Public investment efficiency varies by sector and region.

Policy Options

• Strengthen the public investment management system.
• Improve project preparation and implementation.
• Mainstream climate considerations into investment planning.
• Develop climate-smart frameworks for public investment management.

Health Expenditure and Policy

Key Takeaways

• Health spending is a significant component of public expenditure.
• There are disparities in health outcomes and service coverage across regions.
• The Phalala Fund has been used to refer patients for health services, but its impact needs evaluation.
• Public health expenditure is below regional averages, and efficiency is low.

Policy Options

• Stabilize health spending and set appropriate priorities.
• Increase efficiency of public health spending.
• Address the causes of inefficiency, such as poor resource allocation and weak monitoring.
• Improve the targeting of health programs and enhance the use of data for better decision-making.
• Strengthen the Ministry of Health's budget execution and oversight.

Conclusion and Policy Recommendations

• Fiscal policy reform is essential for transitioning to a more inclusive and sustainable private sector-led growth model.
• Structural reforms, including strengthening public financial management, improving tax administration, and reforming SOEs, are critical to achieving fiscal stability and development outcomes.
• The government should prioritize the full implementation of the Fiscal Adjustment Plan (FAP) and the Revenue Stabilization Fund to reduce fiscal volatility and improve debt sustainability.
• Enhancing the investment climate through competitive fiscal policies and efficient public spending will be key to long-term development and poverty reduction.