The country is projected to rank among Africa’s 10 governments spending more money than they collect this year, with the World Bank forecasting that government expenditure will exceed revenue by 5.2% of gross domestic product (GDP) in 2026.
The projection places the country among the continent’s 10 governments with the largest projected fiscal deficits this year, according to the World Bank’s latest Africa Economic Update 2026, which also projects government debt will rise to 47.9% of GDP this year.
Simply put, the World Bank expects government to spend considerably more than it earns through taxes, Southern African Customs Union (SACU) receipts, grants and other income. The gap has to be financed, largely through borrowing, increasing the country’s debt burden.
A fiscal deficit is the difference between what government collects in revenue and what it spends. While deficits are not unusual, particularly during periods of economic slowdown or heavy investment, persistent deficits generally require additional borrowing, increasing debt and reducing government’s ability to respond to future economic shocks.
The Budget Estimates for the current financial year highlight that assessment. They project total revenue and grants of E31.9 billion against planned expenditure of E36.9 billion, leaving a financing gap of just over E5 billion.
To bridge that gap, the Ministry of Finance plans to borrow more than E5.7 billion externally while also raising more than E540 million on the domestic market.
The growing reliance on borrowing is already reflected in the State’s spending plans as the budget estimates allocate almost E9.7 billion towards debt principal repayments and interest alone, making debt servicing one of government’s single largest spending commitments before funding is allocated to ministries and development programmes.
The assessment also broadly mirrors concerns already being expressed by government itself as it comes only days after Minister of Finance Neal Rijkenberg acknowledged before Parliament that the ambitious domestic revenue target had become increasingly difficult to achieve, conceding that the Eswatini Revenue Service’s target of collecting almost E18 billion this financial year was now effectively beyond reach because of deteriorating global economic conditions.
“As I sit here, especially with what’s happening in Iran, the target is unattainable,” Rijkenberg told Members of Parliament while appearing before the House of Assembly’s Finance Portfolio Committee, adding that only “God’s grace” could see the revenue authority still achieve its target.
The World Bank reaches a similar conclusion. It attributes much of the continuing pressure on African public finances to external developments beyond governments’ control, particularly escalating tensions in the Middle East, which have increased risks through higher fuel prices, rising fertiliser costs, disrupted shipping routes and weaker investment flows.
Those pressures, the report says, are likely to be felt most severely by governments with limited fiscal space because they have less room to shield households and businesses from rising costs.
Although the Bretton Woods institution says African governments have made significant progress in reducing their primary fiscal deficits since the COVID-19 pandemic by bringing day-to-day expenditure closer to revenue, that progress has been overshadowed by rapidly rising debt-servicing costs.
The report warns that four out of every five African countries now spend more servicing debt than they spend on either health or education, leaving governments with less money to invest in healthcare, education, infrastructure and long-term economic development.
The fiscal pressures identified by the World Bank are also reflected across the region.
Among Southern African countries, Malawi is projected to record the region’s largest deficit at 11.8% of GDP, more than double Eswatini’s projected shortfall. Botswana and Namibia are also expected to remain deeper in deficit at 7.1% and 6.9% respectively, while Mozambique is forecast to match Eswatini at 5.2%.
South Africa, by comparison, is projected to record a deficit of 4.3% of GDP, while Lesotho’s is forecast at 1.7%.
A similar pattern emerges in East Africa. Kenya is projected to post a deficit of 5.6% of GDP, slightly larger than Eswatini’s, while Uganda is expected to record 6.2%. Tanzania, meanwhile, is forecast to maintain a considerably narrower deficit of 3.1%.
The World Bank nevertheless expects Sub-Saharan Africa’s economy to continue growing, projecting regional growth of 4.1% in 2026. However, it cautions that growth alone will not be enough unless governments strengthen public finances, improve revenue collection, manage debt more sustainably and create conditions that encourage private investment.
The findings also come as the Central Bank of Eswatini’s latest Monthly Statistical Release shows gross official reserves declined by 13.7% to E8.8 billion in May, reducing the country’s import cover from 2.3 months to two months.
While the bank said part of the decline reflected one-off fiscal payments and foreign currency outflows, it also shone light on the fact that the economy now has less capacity to absorb external shocks before those pressures filter through to households and businesses.
The World Bank’s projections, therefore, come at a time when pressure on the country’s public finances is being reflected across several key economic indicators.
Government is budgeting for another deficit financed through borrowing, the Minister of Finance has warned that revenue growth is becoming increasingly difficult to achieve, and the Central Bank says the country’s external financial buffers have weakened.
