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A lot has been written about Souh Africa's R2,4 billion bailout of the Swaziland government, and the debate revolves around whether not SA should have made the funds available, given the challenges the country faces on home soil. I'm not sure where I stand on the matter, perhaps because I'm more concerned as to how Swaziland, or any country for that matter, got into a situation where revenue streams dried-up seemingly overnight without alternatives or substitutes. Since losing a big chunk of its lucrative share of the SA Customs Union revenues, the Swaziland economy has been on a steady slide, and my fear is that this slide will continue foe a while yet.
It is clear that in order for Swaziland to survive as a nation, those in leadership position in that country have to find other means through which the state can earn much needed revenues to keep the economy ticking along.
To my mind, by far the most scary aspect of SA's bailout is the size of it in relation to the Swaziland economy. The R2.4 billion which South Africa has offered represents just over 5% of the Swaziland's GDP. To put it into perspective, if South Africa was to require a bailout equal to 5% of the country's GDP of R2.7 trillion, this would be equal to a staggering R150 billion. An injection equivalent to 5% of the country's GDP indicates just how distressed the Swaziland economy is and I suspect there will be more such bailouts before the country can stand on its own feet. Forget about economic turmoil in Europe, we have turmoil right on our door step and the next country to watch is Lesotho.
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