E4.4bn capital budget still unused

MBABANE – Government had E4.4 billion remaining from its capital budget at mid-year, with project execution reaching 44 per cent.

The Mid-Year Budget Review shows that capital expenditure stood at E3.4 billion against an approved annual allocation of E7.8 billion.

This left 56 per cent of the capital budget unexecuted by the end of September.

The figures raise questions about the pace at which government can implement development projects during the remaining six months.

Capital expenditure finances development activities, including infrastructure intended to support economic growth and improve public services.

The Ministry of Finance acknowledges the need to ensure that budget allocations translate into timely project implementation and value for money.

According to the review, the 44 per cent execution rate represents a slight improvement from the corresponding period last year.

Government attributes the improvement to gradual acceleration in project implementation and strengthened monitoring of infrastructure expenditure.

The ministry expects capital expenditure to accelerate during the third and fourth quarters.

It says historical expenditure patterns show that implementation of capital projects generally gains momentum during the latter half of the financial year.

This expectation means government will need to execute a substantial proportion of its remaining development budget before the financial year closes.

The review also identifies tight cash flow conditions as a challenge affecting expenditure management across government.

It states that line ministries face increased spending pressures despite efforts to maintain financial discipline.

Government’s medium-term outlook points to a different trend in capital expenditure.

The ministry projects that capital spending will decline by an average of 5.2 per cent over the medium term.

It links the anticipated reduction to the expected completion of major infrastructure projects.

These include the Mkhondvo-Ngwavuma Water Augmentation Project, Youth Employment Opportunities Project, ASCENT Project and MR14 road infrastructure project.

The statement also identifies the Big Five Nature Reserve project and Palazzo Ezulwini International Convention Centre among developments expected to progress or reach completion.

Several energy projects are expected to be completed by the 2027/28 financial year.

The ministry believes these investments will strengthen domestic electricity generation and reduce dependence on imported power.

Economy slows as youth joblessness persists

MBABANE – Eswatini’s economy is expected to grow more slowly in 2026, while more than half of young people in the labour force remain unemployed.

The 2026/27 Mid-Year Budget Review projects economic growth of 3.7 per cent this year, down from 4.9 per cent in 2025.

The slowdown comes as unemployment remains at 33.5 per cent nationally and 52.2 per cent among the youth.

The figures highlight the continuing challenge of translating economic expansion into employment opportunities.

According to the Ministry of Finance, economic growth accelerated in 2025 largely because of major public and private investment projects.

However, the stimulus from these developments is expected to weaken during 2026.

The ministry also identifies higher fuel costs, weaker global demand, tighter financing conditions and weather-related disruptions among factors weighing on economic activity.

These pressures are expected to reduce the pace of growth despite positive performance across several sectors.

Mining and quarrying, manufacturing, tourism and information and communication technology have contributed to economic activity.

Ongoing infrastructure investment has also supported growth.

However, the ministry acknowledges that economic expansion has not resolved the country’s persistent unemployment problem.

The review describes unemployment as a structural challenge requiring changes in how the economy creates jobs.

It identifies private-sector employment, improved access to finance and support for micro, small and medium-sized enterprises as priorities.

Government also recognises the need to reduce skills mismatches.

This refers to the gap between the skills possessed by jobseekers and those required by employers.

The ministry believes addressing this mismatch could improve employment prospects and strengthen productivity.

The ministry further acknowledges that poverty and inequality remain obstacles to inclusive economic growth.

It says improvements in education, health and social protection are necessary to ensure that economic expansion translates into better living standards.

Over the medium term, government expects economic growth to average 3.3 per cent.

This is below the 4.9 per cent growth recorded in 2025.

The forecast suggests that the country may face a prolonged period of more moderate economic expansion.

Government says sustaining growth will require greater private-sector participation, export diversification and structural reforms.

It also identifies improved competitiveness and a stronger business environment as necessary conditions for attracting investment.

Airfares surge 28 per cent

MBABANE – Air passenger transport fares increased by 28 per cent year-on-year in August 2026, adding to transport cost pressures facing Eswatini.

The increase, disclosed in the 2026/27 Mid-Year Budget Review, was considerably higher than the 4 per cent annual rise recorded in August 2025.

The difference amounts to 24 percentage points.

The Ministry of Finance identifies rising transport costs among the inflationary pressures affecting the domestic economy.

The review links the broader transport cost environment to disruptions in international oil markets.

Shipping risks in the Strait of Hormuz and the Red Sea, together with restrictions on diesel exports from Russia, contributed to pressure on global fuel supplies.

According to the ministry, international oil prices increased by 2.4 per cent between June and July 2026.

Higher oil prices placed upward pressure on domestic fuel prices and transport costs.

The ministry warns that rising fuel costs can increase expenses associated with transporting and distributing goods.

These additional costs may eventually contribute to higher prices across other sectors of the economy.

The ministry says the introduction of a fuel price regulation mechanism, financed through a fuel levy, helped stabilise domestic prices.

The mechanism is intended to moderate fluctuations in fuel prices and reduce their immediate effect on consumers.

Government acknowledges that inflation risks remain elevated.

Renewed geopolitical tensions could push international commodity prices higher, while exchange-rate movements could increase the cost of imported goods.

The ministry identifies developments in United States monetary policy among factors that could influence exchange-rate pressures.

Govt plans cuts to capital spending

…major projects expected to reach completion

MBABANE – Government expects capital expenditure to decline by an average of 5.2 per cent as several major infrastructure projects approach completion.

The 2026/27 mid-year budget review links the projected reduction to the anticipated completion of developments in water, roads, employment and energy infrastructure.

The Ministry of Finance identifies the Mkhondvo-Ngwavuma Water Augmentation Project (MNWAP), Youth Employment Opportunities Project, ASCENT Project and MR14 road infrastructure project among developments expected to contribute to lower capital expenditure requirements.

However, the projected reduction comes as government seeks to control expenditure while managing rising debt-service obligations.

According to the statement, government expects total expenditure to average E37.6 billion over the medium term.

This represents projected average growth of 0.5 per cent.

The ministry says the spending outlook reflects its fiscal consolidation objectives.

Nevertheless, the review identifies compensation of employees, inflationary pressures, grants and subventions, borrowing costs and capital investment among continuing expenditure demands.

Government also expects several major developments to progress during the medium-term period.

These include the Big Five Nature Reserve project and the Palazzo Ezulwini International Convention Centre.

The statement says the Big Five Nature Reserve project is gaining momentum, while referring to completion of the convention centre.

In the energy sector, the ministry expects several electricity generation projects to reach completion by the 2027/28 financial year.

These include the 13.5MW Lower Maguduza Hydro Plant and a 75MW solar project.

The review also refers to biomass plants, although the generation capacity is unclear in the transcribed statement.

Government expects the energy developments to increase domestic electricity generation and reduce dependence on imported power.

The ministry believes improved energy security could support industrial expansion by lowering production costs.

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