Africa-Press – Eswatini. Eswatini’s share of SACU receipts are expected to rebound and average over E7 billion in the medium term.
This was disclosed by Minister of Finance Neal Rijkenberg in the Mid-Term Budget Review Report, which was tabled in Parliament last week. He said in the 2023/24 financial year, SACU was expected to grow by 67.2 per cent to E9.66 billion from E5.8 billion, followed by E7.09 billion in 2024/25 and E7.12 billion in 2025/26, assuming some of the SACU receipts were put in the proposed SACU Stabilisation Fund.
In tandem to that, total domestic tax collection is expected to increase over the medium-term by an average six per cent, amounting to E12.98 billion in 2023/24 followed by E14.95 billion in 2024/25 and E14.81 billion in 2025/26.
“Total revenue is expected to grow both on the domestic collection and SACU receipts in the medium-term. In 2023/24, revenue and grants are expected to amount to E23.85 billion,” said Rijkenberg.
He mentioned that total revenue and grants were expected to grow by around 24 per cent in 2023/24 when compared to 2022/23 financial year. Rijkenberg said the growth projection was attributed to higher anticipated domestic revenue collection, specifically on items such as income tax and taxes on goods and services, and a rebound in SACU receipts.
In the 2024/25 financial year, total revenue and grants were expected to slightly decrease by six per cent, amounting to E22.5 billion followed by a three per cent growth in 2025/26 financial year, which translates to E23.2 billion.
The minister said the projected increase in domestic revenue collection in the medium term was largely attributed to a number of proposed revenue measures forming part of the FAP, efficiency gains and favourable economic growth.
He said government was working tirelessly to ensure that revenue enhancement reforms were put into place. Rijkenberg said the strategy includes the following policy changes:
n Establishment of the SACU Stabilisation Fund, wherein draft regulations are already with the Attorney General; Efficiency gains coming from transferring all other revenue collections offices to Eswatini Revenue Services;
n The Income Tax (Amendment) Bill of 2022. The bill was projected to be promulgated by the end of the current year and implementation date was expected to be July 2023. Currently, the bill has been submitted to the House of Assembly and public hearings have been conducted and completed;
n The Finance (Amendment) Bill, 2022. The bill has been submitted to Parliament and the Finance Portfolio Committee has been trained;
n The repeal of the Graded Tax Bill, 2022.
The bill is currently being drafted, while, simultaneously, stakeholder consultation was in progress;
n The introduction of an automated system by ERS is expected to have a considerable positive impact on VAT collection.
The with successful implementation of these revenue measures, domestic collection is expected to increase substantially over the medium-term, further leading to reduced dependence on SACU receipts, which have proven to be an important but volatile source of income in the recent past. Importantly, the SACU Stabilisation Fund will reduce the volatility on SACU receipts, which has been a long-term objective for the Government, in order to improve fiscal stability.
The minister added total government expenditure for the 2023/24 financial year was projected to reach 31 per cent of GDP and showing a three per cent increase from the 2022/23 financial year budget and only one per cent increase from the 2022/23 financial year estimated outturn.
“The increase is mainly as a result of inflationary pressure on goods and services.
The other expenditure items are decreasing in real terms as they have been kept constant at 2022/23 financial year level. Rationalising expenditure in the medium term remains central to the government’s objective of driving the fiscus on a sustainable trajectory.
In a nutshell, with the above mentioned fiscal reforms and policies implemented, it is anticipated that the budget deficits and fiscal challenges experienced in previous years can be overcome in the medium-term,” said Rijkenberg.
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