On June 24, the Eswatini Economic Analysis and Research Centre (ESEPARC) hosted an important event at the Hilton where the World Bank presented its 2nd Eswatini Economic Update. The presentation provided a detailed analysis of the country’s macroeconomic environment, highlighting both achievements and ongoing challenges. The event also featured a complementary presentation by Sanele Sibiya of the University of Eswatini (UNESWA), who focused on the strategic role of technology and debt management in Eswatini’s economic future. 

World Bank economist Marko Kwaramba described Eswatini’s economic performance as mixed. While there have been some positive developments, real GDP growth has been volatile. He emphasized that sustaining growth will require accelerating digital reforms, strengthening public finances, and addressing key structural issues. 

“One of the most pressing concerns is unemployment, which currently stands at 35.4%”, he cited. This rate is three times higher than the average for lower-middle-income countries in 2023. Despite earlier gains, poverty reduction has slowed, and many households continue to face difficulties due to frequent climate shocks and economic instability. Heavy dependence on Southern African Customs Union (SACU) transfers exposes Eswatini to external risks. Limited digital adoption in sectors such as agriculture and services is also holding back productivity and job creation. 

The update showed that inflation, which eased in 2024, is rising again and may become the highest among SACU countries in 2025. Food inflation has fallen from double digits to single digits, but other price pressures remain a concern. At the same time, Eswatini’s current account surplus is shrinking as the services deficit widens. International reserves are declining, highlighting growing vulnerabilities in the external sector. 

On the fiscal side, Kwaramba noted some progress in tightening public finances since 2018. However, government spending is increasing again, and public debt continues to rise. While the financial outlook shows some improvement, the overall situation remains challenging and will require careful management. 

The World Bank projects that Eswatini’s economy could grow by 5% in 2025 and 4% in 2026, assuming successful implementation of public and private investment projects, moderate trade uncertainty, and progress on reforms. However, several risks could undermine this outlook. These include increased trade uncertainty, slower growth in major trading partners such as South Africa, rising inflation, climate shocks, and delays in investment projects. 

To address these challenges, the update recommends three main policy priorities. First, strengthen macroeconomic management by adopting prudent fiscal and monetary policies, clearing government arrears, and containing public debt. Second, boost job creation through private sector growth by improving the business climate and supporting export-oriented industries. Third, improve public services by making government spending more efficient and targeted. 

A key message from the World Bank was the urgent need to accelerate digital reforms. Digitalization offers Eswatini a clear path to higher productivity, economic diversification, and reduced dependence on SACU revenues. With digital uptake still low in many sectors, policymakers are urged to make digital transformation a top priority to promote inclusive growth and job creation. 

Following the World Bank presentation, Sanele Sibiya of UNESWA highlighted the critical role of technology in accelerating growth and managing Eswatini’s rising public debt. He noted that the country recently approved a new borrowing amounting to approximately E11 billion, pushing the debt-to-GDP ratio from 40.5% to 43%. Total debt commitments now stand at nearly 57.87% of GDP, approaching the International Monetary Fund’s recommended threshold of 60%. 

Sibiya cautioned that Eswatini’s fiscal vulnerability is not just about the size of the debt but also the structure of revenue. The country remains heavily dependent on SACU transfers, with a narrow and low-elasticity tax base. Public debt has grown faster than tax revenues, which have stagnated since 2015. Debt servicing consumes over 7% of government revenue, limiting fiscal space for development. 

He stressed that borrowing without corresponding productive investment risks squeezing future fiscal capacity. Gross capital formation remains low, below regional averages, and the budget deficit is larger than official figures suggest when off-budget debt repayments are included. 

To avoid falling into a debt trap, Sibiya recommended reforming public finance systems before expanding debt-financed investments. Borrowing should target sectors with high employment multipliers, direct impacts on domestic production and trade, and strong potential to grow tax revenues. He also urged institutionalizing debt impact assessments, including fiscal stress testing and intergenerational burden analysis. 

Sibiya emphasized that technology must be used strategically, not just for innovation but to improve productivity, broaden the tax base, and make debt servicing more manageable. Examples include e-tax administration systems, AI-powered customs enforcement to reduce cross border fraud, and digital tools for fiscal forecasting to manage SACU revenue volatility. 

The 2nd Eswatini Economic Update, complemented by insights on technology and debt management, presents a clear picture of a country with significant opportunities but also considerable risks. The World Bank and UNESWA agree that Eswatini must act decisively to accelerate digital reforms, maintain fiscal discipline, and ensure that borrowing supports productive investments. With coordinated efforts, Eswatini can build a more resilient, diversified, and prosperous economy for its people.