Tuesday, July 5, 2022

Fiscal position of SACU countries strong, improving

Southern African Customs Union (SACU) countries continue to reap rich rewards from their membership of the Union and in the assessment of the African Development Bank, their fiscal position is generally improving as Botswana, Lesotho, and Namibia countries pursue fiscal consolidation.

In Botswana, the current account is estimated to have recorded a surplus of P7.9 billion in 2013, compared with a deficit of P4.3 billion in 2012.

The Bank says that “recovery in receipts from the SACU and higher export earnings were the main boosters of improvement.”

The revenues that the country received from SACU between April and December, 2013 remained unchanged.

Swaziland’s dependence on SACU revenues is expected to continue, although the government is making efforts to reduce this. To this end, in the 2014/15 financial year SACU receipts are expected to finance 49 percent of the budget compared to 56 percent in the 2013/14 financial year.

The Bank notes that the country’s high dependence on SACU revenues underscores the need for the authorities to ensure fiscal sustainability.

“This is particularly critical in view of the uncertainties in the trajectory of SACU revenues in the longer term, given the on-going negotiations about the revision of the revenue-sharing formula. It is, therefore, imperative for the government to reprogramme its fiscal priorities, improve tax collection, mobilise alternative sources of financing, and increase expenditure efficiency,” the Bank says in its review of Southern Africa for the fourth quarter of 2013.

Benefiting from increased revenue from SACU, revenue outturn in Namibia is projected to post an annual increase of 15.5 percent to reach N$43.87 billion.

In South Africa, during the first nine months of the 2013/14 financial year, government revenue net of SACU payments increased by 11.6 percent, reaching R630 billion (24.5 percent of GDP), mainly due to higher income tax collections.

The country registered a R1.7 billion trade surplus in February 2014 compared to the deficit of R16 billion during the previous month.

This is the first time since November 2013 that South Africa registered a trade surplus. The inclusion of trade data from the SACU countries in the calculation of the balance of payments is believed to have contributed to the recent trade balance surpluses.

SACU is a single customs territory in which tariffs and barriers to trade are eliminated, while a single external tariff is applied to non-members.

The SACU Trade Agreement was revised in 2002 and aims to facilitate the cross border movement of goods, and integrate member countries into the global economy, through enhanced trade and investment.

SACU’s main challenge is the level of uneven economic diversity and development within its territory.

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