Swaziland Country Risk Report Q4 2018
Swaziland's political environment will deteriorate over the coming months as fiscal pressures and faltering economic growth will lead to unpredictable policy decisions and an increase in public frustrations. While the prospects of the latter leading to widespread unrest are relatively remote given the king's tight stran-glehold on power, an Arab Spring-like spontaneous outburst of public anger cannot be completely discounted.
Weaker growth in South Africa will weigh on demand for Swaziland's exports and on government spending via lower revenues from the regional customs union. Although the latter will only be felt in 2019, given the lag between revenue collection and disbursement, the dire state of Swaziland's fiscal accounts mean that fiscal policy will place a drag on growth in 2018 too.
Swaziland's fiscal deficit will remain sizable over the next decade due to waning Southern African Customs Union revenues. Elevated financing needs will see government debt rise in the years ahead, leading to a significant deterioration in debt sustainability.
Swaziland's current account balance will deteriorate over the next decade due to declining Southern African Custom Union receipts. While external debt will remain low as a percentage of GDP, sovereign risks will rise due to the government's weakening ability to repay its obligations.
Swaziland remains susceptible to adverse weather conditions and any negative weather shocks will lead to inflationary pressures.
The government's weak fiscal position poses risks to debt sustainability. Should the government not rein in expenditures in order to offset waning revenues, Swaziland could experience difficulties in repaying its debt obligations.
Rampant poverty, suppression of political opposition and weak democratic processes could see social unrest rise over the next several years.
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