Swaziland Cash Crunch "Critical," AIDS Spending Hit

Swaziland, whose HIV infection rate of 26 percent is the world's highest, is struggling to maintain spending on AIDS treatment and other basic social services due to a "critical stage" budget crunch, the International Monetary Fund (IMF) said Wednesday.

Africa's last absolute monarchy has a projected budget deficit of 10 percent of gross domestic product, IMF said. Proposed spending cuts have been undermined by "overruns" in defense spending. Swaziland's original target of 7.5 percent of GDP, though still a major gap, would have been a significant improvement from the 14 percent seen when its fiscal crisis began a year ago.

King Mswati III's appointed administration runs what is officially Africa's most bloated bureaucracy. It has managed to hang on by running through central bank reserves and delaying the payment of state wages and other bills. Those arrears stood at 5.3 percent of GDP as of the end of September, IMF said.

"This is reducing private sector activity, with various enterprises dependent on government contracts having to lay off workers or shutting down," said the Washington-based fund.

Mswati has at least a dozen wives and a personal net worth estimated at $200 million. He did not meet with the IMF delegation due to a month-long religious retreat. Mswati previously rejected a $340 million bailout from neighboring South Africa because the offer came with demands for political reform.

Back to other news for November 2011