At the end of June, Eswatini carried public debt of about E42.1 billion, equivalent to roughly 40.4% of the value of everything the economy produces in a year.
The figure has prompted warnings about rising deficits, growing interest costs and whether government is borrowing faster than its revenue can comfortably support.
Yet the debt-to-GDP ratio, useful as it is, measures only one part of the risk. It tells us the size of the debt relative to the economy, but not how expensive that debt is, when it must be repaid, how reliable government revenue is or what the borrowed money has produced.
The kingdom’s ratio also remains below those of several neighbouring countries that continue meeting larger obligations without crisis. So, does Eswatini have a debt problem?
At around 40% of GDP, the country is not unusually indebted by regional or global standards. That is reassuring, but it is only the beginning of the assessment.
Measured by size alone, the country’s debt remains moderate. The real pressure lies in what the ratio cannot show on its own: the rising cost of servicing the debt, the instability of the revenue expected to repay it, the refinancing of old obligations and whether the borrowing has strengthened the economy enough to justify its cost.
Interest alone already absorbs about 9.4% of government revenue and is projected to reach roughly 12.4% next financial year. The stock behind that bill has more than tripled since 2018.
DEBT TO GDP RATIO
Debt-to-GDP is the figure most often used to judge whether a country has borrowed too much. It compares what government owes with what the country produces in a year. The ratio tells us how large the load is. It does not tell us whether the person carrying it is walking on firm ground, whether the road suddenly becomes steeper or whether half the load must be moved from one shoulder to the other.
Japan, for instance, carries public debt of more than twice the size of its annual economy and has not missed a modern sovereign payment.
Ethiopia defaulted in 2023 with debt then estimated at about 37% of GDP, below Eswatini’s present ratio. Ghana now carries about 59%, having come down from nearly 86% — but it reached that level by suspending payments on billions of dollars, restructuring its debt and imposing losses on domestic investors, including pension funds. The ratio fell because the country broke. Recovery had nothing to do with it.
The ratio alone cannot tell us whether we are looking at prudence or the aftermath of failure. That is why the debate cannot end at 40%.
Two countries may owe the same share of their economies and face entirely different futures. One borrows cheaply in its own currency, has long repayment periods and receives stable revenue. The other pays double-digit interest, depends on volatile income and must continually refinance debt falling due.
On paper, the ratios match. In practice, however, this is not the case.
WHOSE FORTY %, THOUGH?
IMF staff concluded their annual assessment this week. Their figure is not 40%. They put public debt at 44.7% of national output at the end of the last financial year, reaching 50% by the end of this one. Neither number is wrong. The Central Bank reports what government itself owes. The Fund counts a wider circle — arrears, guarantees, borrowing carried by state companies rather than the state.
Phuzumoya, financed through the national petroleum company and sitting outside the government’s own debt stock, falls squarely in that gap.
The ratio has a second weakness. It moves without anything happening. In December 2024 government debt stood at E36.2 billion, or 41.5% of output. A month later: E34.9 billion, and 36.6%. Nearly five percentage points in four weeks. Almost none of it was repayment. The Central Bank says why: the national accounts had been rebased. The economy was re-measured and found to be some nine per cent larger.
Government owed in January what it had owed in December, against a bigger denominator. A number that lands anywhere between 37 and 50% depending on who is counting, and whose arithmetic they used, tells you where to begin the argument rather than how to settle it.
WHAT LEADS TO DEFAULTS?
Sovereign defaults often begin with sums that appear almost trivial beside the size of a national economy.
Ethiopia’s default was triggered by a missed interest payment of US$33 million, roughly 0.02% of its GDP. Zambia’s was triggered by a US$42.5 million coupon payment, after an earlier payment of US$40 million had already gone unmade. Ghana formally entered default after missing an interest payment of approximately US$41 million.
These countries did not suddenly owe only those amounts. Years of borrowing had already built the structure beneath them. The missed payment was simply the moment that structure met a shortage of cash, foreign currency or political room.
Default is rarely the instant a country discovers that it owes too much in total. It is the Friday on which the payment is due and the money is not available in the required currency, in the required account, without sacrificing something else the state must also pay.
Households understand this better. A family may look solvent on paper. It owns a house. Two salaries enter the account. The vehicle is still in the driveway. Then one lousy Tuesday arrives. The mortgage, school fees and insurance debit on the same morning. A client pays late. Overtime has been suspended. The account cannot carry everything. Nothing about the household changed on Tuesday, except that several years of promises fell due on the same morning. Countries fail in much the same way.
ESWATINI’S REAL EXPOSURE
Eswatini’s present debt ratio offers legitimate reassurance. The country has not issued the kind of large foreign-currency Eurobonds that created sudden repayment cliffs for Zambia, Ghana and Ethiopia. Much of its borrowing is domestic or linked to the rand, reducing the danger that a sharp currency depreciation will instantly inflate the bulk of its obligations.
Those protections matter. The composition matters as much as the total.
The stock splits almost evenly: about E22 billion owed at home, E20 billion abroad. Of the foreign half, roughly seven in ten Emalangeni are owed to multilateral institutions — the African Development Bank, the World Bank — at concessional or near-concessional rates, most of the rest to other governments, and barely one per cent to commercial lenders. Government pays an average of 5.6% on that foreign debt and has 6.6 years to repay it. That is not a portfolio a bond market can turn on overnight.
The domestic half is a different animal. It costs more, at 7.6%, and it falls due far sooner — 2.4 years on average, with more than a third maturing inside twelve months. The danger sits in the calendar rather than in the identity of the lender.
Those protections should not, however, be confused with immunity. Our country’s weakness sits on the other side of the national ledger: revenue.
Southern African Customs Union receipts remain the single largest source of government income, averaging about 39% of total revenue, yet the country does not control their size. They rise and fall according to a regional customs formula, trade patterns and South Africa’s import cycle.
In the 2025/26 financial year, those receipts fell by about 20%, just as government faced higher spending commitments and a public-sector wage review that made part of the budget more rigid.
This is the contradiction at the centre of our debt position. The obligations are fixed, while the cost of servicing them and a large share of the income meant to cover them both move with forces government does not control. That is the condition in which a crisis becomes possible.
THE PROBLEM IS NOT BORROWING
Every debt raises two questions. How much was borrowed, and what for.
The purpose matters more. Debt is one of the oldest tools for building wealth. Every successful economy has borrowed. Every major company has borrowed. Most homeowners will spend decades repaying money they never had on the day they bought their house.
The real dividing line is not between borrowers and non-borrowers. It is between those who borrow to expand tomorrow’s income and those who borrow to preserve yesterday’s lifestyle.
That distinction explains why two countries carrying similar debt ratios can experience entirely different futures. It also explains why two colleagues earning exactly the same salary can end up living completely different financial lives.
The question, therefore, is not whether Eswatini owes money.
The question is whether that money is buying a stronger Eswatini. Economists often describe good public debt as productive borrowing. The phrase sounds technical.
The idea is remarkably simple. Borrow E100 today. Invest it wisely. Create more than E100 in future income. If that happens consistently, debt becomes a bridge rather than a burden.
Roads shorten transport costs. Electricity attracts manufacturers. Reliable water allows industry to expand. Modern border posts reduce delays. Digital infrastructure allows businesses to trade further and faster. Good schools produce more skilled workers whose incomes eventually generate higher tax revenues. The debt remains. Yet the economy grows faster than the debt. Everyone becomes better able to repay it.
That is how borrowing compounds prosperity rather than anxiety. This is also why countries continue borrowing despite warnings about debt. Governments are not expected to avoid debt altogether, only to ensure that what it finances generates more economic value than the interest eventually paid on it.
That is the standard against which every loan should be judged. Not whether it exists, but whether it earns its keep.
THE IMPORTANT DEBATE
Much of the public conversation has focused on the growing size of the national debt. That concern is understandable. Yet the more important debate has perhaps been missed.
Increasingly, economists, business leaders and international institutions are asking what the borrowing actually financed. That question deserves more attention than the debt ratio itself.
Some borrowing has undeniably funded long-term national assets. The Phuzumoya strategic oil reserve is intended to strengthen the country’s energy security against future supply disruptions. Roads, water infrastructure and other capital projects also fall into this category because they are designed to increase the economy’s productive capacity over decades rather than months.
These investments can reasonably be defended. Others are more difficult.
Official and multilateral estimates put this year’s deficit between roughly 4.6 and 6.4 per cent of national output, depending on whose figures you use. On every one of them, expenditure exceeds revenue. That gap does not arise because government suddenly decided to build several times as many roads.
It arises because ordinary expenditure increasingly exceeds ordinary income, which is a different thing entirely from borrowing to build something. Strip out customs receipts and the underlying budget runs a primary deficit of around 12% of national output.
That is the number the whole position rests on. Investment borrowing expands capacity. Deficit borrowing postpones the adjustment and postponement grows more expensive every year.
That is where I think the public should be knocking on the Finance Minister’s door and asking difficult questions of Parliament’s Portfolio Committees on Finance. Not, “How much have we borrowed?” but, “What exactly are we borrowing for?”
Because that’s where, as the youngsters would say, the danger is. Not when a country borrows to build its future, but when it quietly reaches the point where the borrowing has stopped building anything and is simply paying for today.
This is the first of a two-part edition. The concluding instalment will be published next week.
Mlungisi Ndwandwe is a seasoned strategy and investment executive with extensive experience in corporate development, capital allocation and business growth across international markets. He writes in his capacity as Founder and Chief Executive Officer of Sicebi International Group Holdings.
