Statement on negotiations with Swaziland

27 Aug 2012

National Treasury would like to clarify the response by the Minister of Finance to a parliamentary question on the negotiations between South Africa and Swaziland over a possible loan of R2.4 billion. The Minister's response has been interpreted by some in the media to mean that South Africa will make the first payment to Swaziland next month, September. 

This is not true. Negotiations by financial authorities of the two countries are still underway. The September 2012 reference in the Minister's reply to the parliamentary question was in terms of an intended payment schedule, which, as the Minister's response makes clear, was subject to the conclusion of negotiations by financial authorities of the two countries. 

For ease of reference, the Minister's response is attached.

Question number 157 [no2404e]

Date of publication: 6 August 2012

Mr EM Mthethwa (ANC) to ask the Minister of Finance:

What are the details of the technical discussions that took place between the Government of Swaziland on the possible R1.2 billion loan that had been proposed to be granted to Swaziland, in the context of the global recession which has resulted in Swaziland losing nearly 60% of its revenue from the Southern African Customs Union (SACU)? NO2404E

Reply

The Government of South Africa (GSA) approved the granting of financial assistance of R2.4 billion to the Government of the Kingdom of Swaziland (GKS) in the form of a conditional loan from the South African Reserve Bank to the Central Bank of Swaziland. The GSA will provide the SARB with the necessary Guarantee to secure the loan.

The loan is governed by a Memorandum of Understanding that outlines a set of political, fiscal, collaborative and capacity-building measures that will be pursued by the respective parties. In addition, separate agreements will be signed by the respective Central Bank Governors (Loan Agreement) and the respective Ministers of Finance (Financial Conditions Agreement).

The loan will be paid to the GKS in three equal tranches, subject to certain fiscal and related technical conditions being met. The first tranche payment of R800 million is scheduled for payment in September 2012.

The GKS will repay the loan over a five year period, starting in 2015, by means of a debit order that is placed on their SACU revenue-shares.

Statement issued by National Treasury, August 28 2012

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