Eswatini Public Finance Review

© 2025 International Bank for Reconstruction and Development / The World Bank1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations,and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board ofExecutive Directors, or the governments they represent. The World Bank does not guarantee the accuracyof the data included in this work. The boundaries, colors, denominations, and other information shown onany map in this work do not imply any judgment on the part of The World Bank concerning the legal statusof any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or beconsidered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of whichare specifically reserved. Rights and Permissions Attribution—Please cite the work as follows: World Bank. 2025. Eswatini Public Finance Review. LeveragingFiscal Adjustment for Better Development Outcomes. Translations—If you create a translation of this work, please add the following disclaimer along with theattribution: This translation was not created by The World Bank and should not be considered an official WorldBank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with theattribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in theadaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by TheWorld Bank. Third-party content—The World Bank does not necessarily own each component of the content containedwithin the work. The World Bank, therefore, does not warrant that the use of any third-party-owned individualcomponent or part contained in the work will not infringe on the rights of those third parties. The risk of claimsresulting from such infringement rests solely with you. If you wish to reuse a component of the work, it is yourresponsibility to determine whether permission is needed for that reuse and to obtain permission from thecopyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group,1818 H Street NW, Washington, DC 20433, USA; e-mail: pubrights@worldbank.org. Editor: NameCover & report design: Cybil Nyaradzo Maradza CONTENTS Chapter 1. Macro-Fiscal Context: Makingfiscal policy an instrument for macroeconomicstability and external competitiveness.......1 Introduction.......1 Fiscal policy and economic growth.......1 Strengthening public financial management couldincrease resilience to shocks.......4 Chapter 2. Revenue Mobilization: Increasingdomestic revenue while enhancing competitionand market contestability.......10 Abbreviations and Acronyms.......viiAcknowledgements.......viiiExecutive Summary.......ix Key takeaways.......10 Macro-Fiscal Context: Making fiscal policy aninstrument for macroeconomic stability and externalcompetitiveness.......xi Increasing domestic revenue.......11 Enhancing the mobilization of domestic revenue.......13 Revenue Mobilization: Increasing domesticrevenue while enhancing competition and marketcontestability.......xii Reforming the tax system to increase marketcontestability.......18 Public Spending: Strengthening public financialmanagement to support fiscal consolidation andpromote expenditure efficiency.......xiii Strengthening tax administration to increasedomestic revenue.......18 Maximizing the revenue impact of the FiscalAdjustment Plan.......21 Public Investment Management: Building productivephysical capital while mainstreaming climateconsiderations.......xiv Policy options.......21 Health: Fiscal policies to build human capital with afocus on health.......xiv Chapter 3. Expenditure Management:Strengthening public financial managementto support fiscal consolidation and promoteexpenditure efficiency.......23 Conclusion and Policy Options.......xv Key takeaways.......23 Policy Options.......xv Eswatini’s public sector is large relative to the size ofits economy.......24 Integrating climate change into projectimplementation.......40 Institutional arrangements are critical formainstreaming climate considerations into publicinvestment management.......41 Recurrent spending dominates the budget.......24 Public employment costs take up a considerableshare of the budget.......25 Policy options.......43 Improving expenditure efficiency could facilitateprogress on human development indicators.......26 Chapter 5. Reforming expendituremanagement to improve the performanceof the health system.......45 Stabilizing public investment to facilitate highgrow