Surviving Covid-19 Impact On Economy

Economy analysts believe Eswatini can survive the impacts of COVID-19 by boosting domestic tax revenue and supporting solid socioeconomic growth through sufficiently strong and sustained stimulus mechanism.

Such mechanisms will generate sustainable domestic revenue in both short and medium term basis.

Noting the looming economic contraction and potential negative spillovers it would have on the different sectors of the economy, the Government of Eswatini found it necessary to draw up a national economic recovery plan to save the economy and livelihoods.

The Post-COVID-19 Economic Recovery Plan’s purpose is to resuscitate the economy and reignite economic growth through high impact private sector-led projects that will be implemented as soon as the country comes out of the COVID-19 state of emergency.

An excerpt from the plan reads; “Through this Recovery Plan, the Government of Eswatini (GoE) intends to increase employment opportunities, expand the tax base, and restore the viability and sustainability of the Eswatini economy.”

Much of the proposed projects will support the GoE’s goal to reverse the decline in economic activities, will enhance productive sectors of the economy, and will create jobs as well as restore the economy into a much higher level of production and productivity.”

It has been announced by GoE that in terms of Emalangeni value, there is E23 billion that will be invested into the economy through big business and another E7 billion through government/capital projects out of which a minimum of E5 billion will be absorbed by the Micro Small Medium Enterprises (MSME) sector. The MSME sector will get a share of the E30 billion investment through the intermediate demand/inputs of production they will be supplying to the “big projects”.

Economist, Dr George Choongwa, who is the Regional Coordinator of the Southern African Research Foundation for Economic Development welcomes the plan as he also noted that the government needed to broaden the tax base as an inclusive strategy that would increase the revenue collection channels in both short and long term basis.

He said an important responsibility of economic policymakers in Eswatini is to ensure the longer-term viability of a noninflationary growth path for the economy.

“The Government of Eswatini must be considerate enough not have a future economic hardship by promoting high growth in the short term, while sowing the seeds of future difficulties in terms of an unsustainable growth in public debt or the creation of an unfinanceable future external position,” he said.

Dr Choongwa said fiscal consolidation initiatives may be necessary in the short term to prevent the occurrence of an unsustainable fiscal position in the future. The Economist said these issues may be considered in relation to the current account, government debt, and the impact of unfunded liabilities arising from current fiscal policies which might have come out due to COVID-19 crisis.

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