Overview

  • Eswatini is a landlocked country in Southern Africa bordering South Africa and Mozambique, with a population of 1.2 million. Poverty levels have stagnated at high levels in the last five years, with 39.7% of the population estimated to have been living under the international $1.90 poverty line in 2016 and 2017.

    Eswatini has close economic linkages to South Africa, which it depends on for about 85% of its imports and about 60% of exports. Eswatini is a member of the Common Monetary Area (CMA), with Lesotho, Namibia, and South Africa. Under the CMA, the Eswatini lilangeni (the domestic currency) is pegged at par to the South African rand, which is also legal tender in the country.

    Real gross domestic product (GDP) growth in 2018 is estimated at 2.4% from 2% in 2017, partly driven by a stronger-than-projected recovery in the primary and service sectors. However, due to escalating fiscal challenges (reflected through accumulation of domestic arrears) that are expected to continue slowing recovery in construction and public administration sectors, real GDP for 2019 is projected to decline to 1.3%.

    Wage costs have remained elevated as the fiscal situation continues to deteriorate. As a result, the fiscal deficit increased from about 5% of GDP in 2017 to 7% in 2018. It is projected to remain negative in the medium-term. Consequently, public debt has rapidly increased, rising from 10% of GDP in 2009 to hit around 30% of GDP in July 2019.

    The government also continues accumulating domestic arrears that increased from 3% of GDP in 2016 to 10.3% of GDP by July 2019. As a result, gross official reserves have been consistently below the three-month international benchmark, reaching a low of two months of imports of goods and services in March 2019.

    For the first time, inflation remained below the 3% lower-band threshold from April to August 2019 as the government has kept the price of housing and utilities constant for more than 12 months. During the first eight months of 2019, inflation averaged 3% compared to 4.6% recorded during the same period last year. Due to decreasing inflation the Central Bank of Eswatini maintained an accommodative monetary policy for the same period and further cuts interest by 25 basis points to 6.5% in July 2019.

    Development challenges

    Poverty has persisted despite the country’s lower-middle-income status. Nationally, 58.9% of Swazis lived below the national poverty line in 2017. This follows a decline from 63% in 2009, and 69.0% in 2001. By international poverty standards, 38.6% of Swazis lived below the 2011 purchasing power parity (PPP) of $1.90 per person per day, and this rises to 60.4% when the 2011 PPP $3.20 per person per day poverty line for lower middle-income countries is used.

    Challenges to poverty reduction include slowing economic growth, adverse weather patterns, high prevalence of HIV/AIDS, high unemployment, and high inequality; the per adult equivalent consumption Gini index stagnated around 49.0 between 2010 and 2017.

    National elections were held in September 2018, which the Southern African Development Community and African Union Observer missions declared peaceful. A new cabinet was announced in November and the Strategic Roadmap serves as the guiding document to turn around the economy, improve services delivery and improve fiscal position. 

    Last Updated: Oct 10, 2019

  • The Country Partnership Strategy 2015-2018 (CPS) aimed to support the country’s efforts to reduce poverty and inequality, and to promote shared prosperity in a sustainable way. The Performance and Learning Review (PLR) was noted by the World Bank Board of Directions in August 2018. The PLR extended the CPS by two years to 2020, prioritizing two program pillars: (i) Promoting growth and productivity, and (ii) Strengthening state capabilities.

    The PLR found that ongoing projects and advisory services have been implemented successfully, with strong results. Several improvements have been registered in the health sector, including tuberculosis (TB) treatment success rate, increased safety net support to orphans and vulnerable children, and an increased number of health units providing the five basic services.

    Similarly, the Local Government Project has made notable progress in strengthening municipal and rural local government capacity for the delivery of local services and infrastructure.  

    Preparation of the Systematic Country Diagnostic (SCD) is underway for delivery in FY20 and will guide the development of a new Country Partnership Framework.

    Last Updated: Oct 10, 2019

  • Delivery on technical and analytical work and implementation of ongoing projects includes:

    • The Financial Sector Development Implementation Plan (FSDIP) was prepared under the leadership of the Central Bank, finalized in 2016 and subsequently launched. Its implementation is underway with a focus on stability, supported through the International Monetary Fund program and World Bank Group program on financial inclusion. The joint program is financed by the Financial Sector Reform and Strengthening Initiative.
    • The Health HIV/AIDS, TB Project, which closed in September 2018, contributed to improving access to quality of services, focused on primary health care, maternal health, and HIV/AIDS and TB, and increase the access of orphans and vulnerable children to the social safety net. The project also renovated and equipped selected health facilities including strengthening the referral and transport system. 
    • The Local Government Project, which closed in June 2019, contributed to institutional strengthening of local governments by enhancing financial management capacity as well as delivery of local services and infrastructure. Both projects have met, and in some cases exceeded, their targets.

    New projects are under preparation in water, energy and health, including the Network Reinforcement and Access Project approved by the World Bank Board of Executive Directors in June 2019.

    Last Updated: Oct 10, 2019

  • Partners include United Nations agencies, USAID, European Union, Japan International Cooperation Agency (JICA), and African Development Bank (AfDB). 

    Last Updated: Oct 10, 2019

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LENDING

Eswatini: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Main Office Contact
442 Rodericks Street
Lynnwood Road
Tshwane 0081
+27-12-742-3100
For general information and inquiries
Zandi Ratshitanga
Communications Officer
South Africa
+27-12-742-3107
zratshitanga@worldbank.org
For project-related issues and complaints
+1-202-458-7654
swazilandalert@worldbank.org