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Monday, 19 November 2012

MINISTER WRONG OVER SACKING WORKERS

Swaziland’s Minister of Economic Planning and Development Prince Hlangusemphi seriously misled people when he said that the International Monetary Fund (IMF) was forcing the government to sack workers.

Hlangusemphi said this as part of a larger attack on the IMF, which he claimed did not want to help Swaziland get out of its financial mess.

Hlangusemphi was speaking in an interview with the Swazi Observer, the newspaper in effect owned by King Mswati III, when he said the government would not downsize the Swazi civil service ‘as recommended by the IMF’. He went on to say that if the government sacked workers without consultation it would be in trouble with organizations such as the International Labour Organisation (ILO).

But where Hlangusemphi is wrong is that the IMF has not called for civil servants to be sacked, but it has suggested the government wage bill should be cut by 5 percent. It has never been the IMF’s case to cut jobs of ordinary workers: that suggestion came from the Swazi Government itself.

The IMF has been very public in its advice to the Swaziland Government. In November 2011, for example, Joannes Mongardini, Head of the IMF Mission to Swaziland, said there were other ways to reduce the public expenditure bill in Swaziland without cutting the jobs or wages of ordinary workers.

Mongardini told the BBC World Service Focus on Africa programme the money could be saved from cutting spending on the army, the police and politicians’ allowances.

‘We are recommending for the government to reduce the wages bill by 5 percent. This is a relatively moderate amount compared to countries like Greece, Portugal and Ireland.’

Asked by the BBC about the position of public service workers who have complained about the possibility of retrenchments and wage cuts, Mongardini said, ‘We fully understand that this is a politically difficult decision to make.

‘Having said that, the government can find other ways to reduce the wage bill that will not require salary cuts. In particular, some of the largest increases in the wage bill in recent years are due to increased security forces and police personnel and they also are due to very generous allowances that the government has given to politicians and top civil servants.’

Hlangusemphi also misled the House of Assembly last week when he claimed that the IMF did not want to help Swaziland access funding to revive its economy. He said the IMF had prevented organisations such as the African Development Bank (AfDB) from giving loans to government. 

But Hlangusemphi knows (or should know) that the reason why Swaziland asked for the IMF’s assistance was so it could convince international financers that it could repay any loans it might receive. To do this the Swaziland Government drew up what it called a Fiscal Adjustment Roadmap (FAR) that set out a number of measures it would introduce to cut spending and increase income. But, the government failed to implement its own plan.

Because of this failure, the IMF said in April 2012 it could no longer support the government. It was up to the government to come up with a new plan that might help to save the economy.

The government has not done this. Earlier this month (November 2012) the IMF reported the government had failed to improve the economy in any appreciable way and could not pay its bills. This meant immediate public expenditure cuts were needed if the government was to meet the budget targets it set itself in February 2012.

In a statement following its visit, the IMF said the government would find it difficult to pay its bills this year, without increasing domestic borrowing. It also said that one reason for this was that the government had increased spending this year on security.

Since the IMF’s November statement, there have been a number of attempts from the Swazi Government to deflect attention away from its own failings and to claim the IMF did not know what it was talking about.

Immediately after the IMF reported, Finance Minister Majozi Sithole, described the IMF as biased, negative and unrealistic.  

This was after Mongardini had warned the government of bad times ahead, including a looming negative impact on sugar exports, a tourism sector that had declined by between eight and nine percent, low investor confidence, an envisaged decline in receipts from the Southern African Customs Union (SACU) and possible repatriation of money from local to South African banks.


See also

IMF REPORTS GOVT ECONOMIC FAILURES


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