Kingdom of Eswatini: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Kingdom of Eswatini

Eswatini’s economy expanded by 2.8 percent in 2024, driven by manufacturing and services, while a severe drought kept agricultural output flat. The country faces pressing needs to close critical gaps in infrastructure and address high unemployment (34 percent; 58 percent among youth) and high income inequality. While health and education spending exceed that of peers, outcomes are worse, indicating spending inefficiencies. A significant skill mismatch also constrains growth. The fiscal deficit was 1.3 percent of GDP in FY24/25, while SACU revenue was 3.9 percent of GDP above the historical average. Public debt is moderate at just under 40 percent of GDP; however, it more than doubled during 2014–2020, contributing to ongoing fiscal pressures and rising debt service costs. Looking ahead, SACU revenues are expected to decline significantly relative to the past two years, which could further strain the fiscal outlook. The authorities plan to consolidate over the medium-term to contain public debt to about 40 percent of GDP over the medium term. Eswatini’s international reserves, at about 87 percent of the IMF’s Assessing Reserve Adequacy (ARA) metric at end-2024, are below the recommended level. Banks are well capitalized and liquid; however, the non-performing loan (NPL) ratio remains elevated.