Central bank issues gloomy report

Swaziland's failure to resolve a "rule of law" crisis has undermined economic growth over the past year, according to an annual report by the country's Central Bank. The report noted a downturn in gross domestic product (GDP) from 3.6 percent in 2002 to 2.5 in 2003. "Given the estimated population growth rate of 2.9 percent, this implies a stagnation of the standard of living as measured by per capita income," the bank said. With two-thirds of its 900,000 people living in chronic poverty, the country's sluggish performance comes as bleak news. Virtually every sector showed signs of trouble, while government deficits rose and revenues plunged. In carefully worded language, the bank linked the current lack of foreign direct investment to the "failure" of the government to "implement a corrective plan to restore investor confidence in the country". Swazi authorities have come under fire since last year over the government's active interference in the judiciary. Human rights groups have raised concerns over the deterioration of the rule of law, which culminated in the resignation of the full bench of the Swaziland Court of Appeal after the government declared it would not abide by court decisions with which it did not agree. Swaziland's membership in the African Growth and Opportunities Act had not helped the country to retain existing foreign investments or secure new investment, the bank noted. Manufacturing constituted 35 percent of the national economy. Eighty percent of Swazis are involved in agriculture, mostly as peasant farmers on communal land, but agriculture accounts for only 8.5 percent of the economy and production on communal land dropped nearly 20 percent from 2003. The bank blamed erratic rainfall, but studies by the Ministry of Agriculture also pointed to HIV/AIDS, which has had a serious impact on the agricultural workforce. One positive sign in the agriculture sector was the end of a ban on Swazi beef by the European Union (EU) following the end of an outbreak of foot-and-mouth disease. Still, Swaziland failed to fill the quota of beef the EU was obliged to buy according to a joint treaty. Swaziland's main agricultural export, sugar, increased by 7.8 percent, with export receipts up 10.6 percent. With locally generated revenues from income and company taxes declining, Swaziland had become even more dependant on its share of the Southern African Customs Union (SACU) receipts. Since most taxes on goods imported into the region are paid by South Africa, many economists see the share given to Swaziland as a gift from its relatively affluent and powerful neighbour. "Last year, 51 percent of all government revenue came from SACU receipts. That was untenable enough, but this year that has increased, and now 58 percent of money used to run the country comes from SACU," a Johannesburg-based economist told IRIN.