Based on an annual survey of the economy, the IMF report to government said: "The serious economic situation in Swaziland, with the food shortage and continued spread of HIV/AIDS, exacerbates the already severe impact of persistent high unemployment, income inequity and poverty."
In general, the IMF found government's economic policies needed overhauling, and failure to do so was "holding down Swaziland's growth prospects and preventing improvements in the standard of living".
"Meeting these challenges would require a return to fiscal discipline and reorienting spending toward critical social sectors and humanitarian priorities," the report said.
In particular, the bank faulted government's pursuit of a US $72 million private jet for King Mswati III. "The acquisition of a new airplane for the King would crowd out social needs and deter donor support while depleting foreign exchange reserves," the IMF said.
Responding to the IMF's economic assessment Minister of Finance Majozi Sithole told reporters: "We don't necessarily have to be told by people from the outside how the country's economic affairs should be managed."
As for the jet desired by Mswati, who appointed Sithole, the finance minister said that in his opinion there is a lot of money available for the purchase. There is only a temporary "cash flow" situation to be fixed, he said.
The independent Times of Swaziland newspaper scoffed at the minister's claim, and noted that the country's deficit had doubled in the past year while gross domestic product (GDP) had nose-dived.
The IMF report noted that Swaziland's GDP fell from 7 percent annual growth in the 1980s to 3 percent annually in the 1990s, to 1,8 percent last year. The drops reflected Swaziland's lack of competitiveness in the region.
The absence of meaningful political reform, as the palace resists domestic and international calls for democratic liberalisation, has contributed to investor wariness, analysts told IRIN.
"Swaziland's growth performance has weakened since the early 1990s as the emergence of South Africa from economic isolation has eroded some of the country's advantage as a location for investment," said the IMF report.
"South Africa is seen as stable now, whereas investors never know what the monarchy is going to do next," an Mbabane-based banker told IRIN.
The IMF assessment expressed alarm that 38,6 percent of the adult population is HIV positive, and nearly a third of the population are without food due to drought and alleged land mismanagement.
"The [IMF] directors felt that reform of the land tenure system would be helpful in raising agricultural productivity and alleviating poverty," the report said on the matter of food security.
Four out of five Swazis are peasants under palace-appointed chiefs. Without title deed ownership of their properties, farmers cannot secure bank loans for irrigation equipment and other improvements to transform subsistence farming into commercial farming.
Last week, Ben Nsibandze, director of the National Disaster Task Relief Force, announced nearly a 10 percent increase in the number of Swazis requiring food assistance, to 287,000, up from 265,000 in November 2002.
The bank report did note some steps the government has taken toward economic reform, such as a money-laundering act. But government is in no hurry to privatise public enterprises like the postal system, the electronic media and parastatals, as the IMF would like.
The economic assessment did express relief that six expensive "Millennium Projects" the government intended to build were being turned over to private developers.
The projects include a luxury hotel and convention centre, a giant airport, and an African theme park. After much fanfare when the projects were launched in 2000, little has been heard about them in a year.
Musa Hlope, president of the Swaziland Federation of Employers, told IRIN: "There is nothing in the (IMF) report we haven't been telling government for a long time. Hopefully coming from a respected body, the message will be heard."
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