Bloomberg News

Swaziland Asks South Africa to Help Solve Financial Problems

June 22, 2011

(Updates with director-general’s comments starting in second paragraph.)

June 22 (Bloomberg) -- South Africa’s National Treasury is considering a request for financial aid from neighboring Swaziland, which is at risk of running out of money to pay state employees, said Jerry Matjila, the director-general of South Africa’s international relations department.

“The question is how much we can help,” Matjila told lawmakers in Cape Town today. “We want a stable continent. We start with our neighbors.”

Swaziland, Africa’s third-largest sugar producer, lost a third of its revenue last year as income from a regional customs union that includes South Africa declined after the global economic crisis cut trade. The landlocked nation is seeking “a very considerable amount of money” from South Africa, in addition to an International Monetary Fund loan that requires it to cut the state’s wage bill, Matjila said in an interview.

In April, police used tear gas, rubber bullets and water cannons to quell protests by labor unions to demand democracy in sub-Saharan Africa’s last absolute monarchy and to oppose state austerity measures.

Economic growth in Swaziland is likely to slow to 1.9 percent this year from 2.1 percent last year, while inflation may rise to 7.7 percent from 4.5 percent, according to the 2011 Africa Economic Outlook. The outlook, published on June 6, was co-written by the African Development Bank, the Organization for Economic Cooperation and Development, the United Nations Development Program and the UN Economic Commission for Africa.

South Africa may have to contend with a “flood” of immigrants from Swaziland if its financial problems are not resolved, Matjila said.

--Editors: Philip Sanders, Gordon Bell

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Andrew Barden at barden@bloomberg.net.


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