MBABANE – Despite a great outlook on the 2023/24 budget estimates by the Minister of Finance, government still has to raise a billion Emalangeni in order to pay outstanding invoices.
The minister, Neal Rijkenberg, confirmed that since August 2022, government has struggled to pay suppliers on time, something they were able to do consistently for more than two years before then. Rijkenberg said though the situation looked good, there was still one hurdle that the government needed to overcome which would ensure that all outstanding invoices were paid by the second week of April 2023. He said government was planning to raise over a billion Emalangeni on the South African Stock Exchange to fund the budget that was approved and was being spent.
paying the suppliers
The minister said the prospect of paying the suppliers by the end of the month or the beginning of April looked achievable. “Due to the delay in getting the approval from Parliament and the delay in the actual listing, we will now only be getting this money at the end of this month or early next month. Even though we managed to pay suppliers on time for more than two years, from around August 2022 we started having challenges in paying on time,” he said. Rijkenberg admitted that the delays in sourcing the funds caused the accumulation of arrears to suppliers to grow over the last few months. However, he revealed that government continued to reduce the burden by paying some of the suppliers on a weekly basis. He stated that in the past week alone, they had managed to disburse payments of over E300 million to suppliers and significantly reduced the burden. The minister said they would continue to pay the suppliers on a weekly basis as tax comes in.
“Currently there are still suppliers that have not been paid on time, but we are sure to have them all settled by the second week of April. The arrears to suppliers are not more than 90 days old. If there are suppliers that claim to not have been paid for six months, then their invoices are probably still with the ministries and not with Treasury,” he added. In a speech defined as youth-focused, the minister presented a E26 billion self-funded budget in parliament last month.
extremely difficult
Minister Rijkenberg said the year 2022/23 has been extremely difficult for all of us. “We feel the pain that every liswati is going through, especially our suppliers who have been relentlessly supplying their goods and providing services in spite of the irregular payments. Government, together with Eswatini Revenue Service (ERS), is aiming at holding taxes constant and on balance, while enhancing efficiencies in tax collection and focusing on broadening the tax base. I am pleased to announce that for a third year in a row, income tax rates will not increase.”
The minister announced during the budget speech that the real achievement was the fact that the budget set the country on a sustainable economic path. “Despite these achievements, many emaSwati may not yet be seeing or experiencing these benefits in their daily lives and may not be receiving the social and economic dividends. This budget begins to address this, by ensuring that all emaSwati receive better service delivery. This administration inherited an unsustainable economy, fraught with budget deficits, declining revenues and huge financing gaps, ballooning arrears and deteriorating cash flows.
statutory obligations
“Over the years, we have been lamenting over government’s failure to meet its statutory obligations, such as paying suppliers on time and remitting all other transfers, especially to schools. Times have indeed been very difficult, but we have overcome. The budget I will be tabling today aims to bring a more positive and promising year ahead of us and a good base for the years to come,” he said. Interviewed on conditions of anonymity, some of the service providers and suppliers of government said they were no longer able to pay their staff.
One of the suppliers said there was an outstanding invoice with government that had not been paid. The supplier said he was forced to take loans from shylocks to sustain the contract he has with government. “The situation is very difficult and we have been debating on closing down, but again our biggest issue has been our staff. We employed about 23 people and their only way of earning a living is through what we do here, so that’s the most difficult part of being owed by government. The banks no longer give us overdrafts and we only get assistance from shylocks.
sustain a business
“We all know that you cannot sustain a business on loans. Most of our assets are now held in bonds and against the loans we take, such that there is no sustainability whatsoever in the business anymore,” said the supplier. Speaking to the Times of Eswatini before the budget speech, Economist Thembinkosi Dube said it was important for government to find a way to pay suppliers. Dube said the suppliers were part of a machinery driving the economy of the country as they employ people directly. He said when one supplier suffers, the staff suffers and in turn the whole family suffers. “I know that this is an unpopular kind of thought, but let me make an example, let’s say the government has not paid supplier X who employs 30 people to cook on a shift basis, it means supplier X will now have to cut the shifts of the workers so that he can be able to pay lesser salaries at the end of the month. More so, supplier X may decide to understate or under-declare his return so that Eswatini Revenue Service (ERS) cannot take more and this then has a direct impact on how the country makes its money,” said Dube.
prioritise suppliers
Another economist, who spoke on condition of anonymity, concurred that government should prioritise suppliers to enhance social stability. She said suppliers hire the general public and therefore it was important for them to be financially reliable to minimise agitation. “There are so many examples I can make to drive the point that government needs to prioritise suppliers. This has an effect on the education system and many other important sectors. If a supplier who cooks for patients at a government hospital or the police service has not been paid, the service delivery will be poor and government will be left to deal with angry patients and an agitated police service,” said the economist. She further applauded the minister of Finance for spearheading a turnaround, but warned that stability of the financial status of the country should be based on real figures. Quizzed on what lasting solution the government could employ to vindicate the situation since the financial stability was unpredictable, the economist said an agreement with ERS would save the situation.
tax window
She said government should consider creating a tax window for service providers supplying essential supplies. She said the tax window would allow ERS to collect the tax from the government debt as compared to the supplier declaring and paying tax for unpaid invoices. She further suggested that the government could alternatively have a clause in the contract allowing the supplier to charge interest if a purchase order is not paid up after a certain number of months. She said this would give the supplier leverage and also put pressure on government to fulfil as per the contract. “The situation, as it is now, leaves all the liability to the supplier and my suggestion would be for government to take a portion of the burden of loss from the supplier,” she added. While other countries in the region finance their budgets through loans, the country would be receiving over E11 billion from the Southern African Customs Union (SACU).