65 Million US Dollars Digital Push Lifts Debt To 41.13% Of GDP

By: Nkosiyabusa Nsibande

Eswatini is set to increase its direct public debt to approximately 41.13% of GDP at full disbursement under a US$65 million World Bank financing package for the Digital Eswatini project, while simultaneously assuming contingent exposure of up to US$26 million through a sovereign guarantee issued for the Eswatini Posts and Telecommunications Corporation (EPTC).

Finance Minister Neal Rijkenberg presented three interrelated Bills to Parliament covering the financing, comprising a US$19.3 million sovereign loan from the International Bank for Reconstruction and Development (IBRD), a US$19.7 million concessional credit from the International Development Association (IDA), and a further US$26 million IBRD loan to EPTC backed by a government guarantee. Explaining the structure to legislators, Rijkenberg said the World Bank has “different pockets of things that they do,” with IBRD providing the type of lending Eswatini is more accustomed to accessing, while IDA provides substantially more concessional financing to developing countries.

The distinction is important for the country’s public finances because the three facilities do not carry the same fiscal treatment. The US$39 million in direct IBRD and IDA borrowing will increase the government’s debt stock, while the US$26 million EPTC facility will initially be recognized as a contingent liability because repayment rests with the corporation, with the state standing behind the loan through the sovereign guarantee.

Rijkenberg described IDA financing as “very concessional,” explaining that Eswatini had only recently qualified for access to the facility. He told Parliament that the IDA structure provided significantly softer financing terms than conventional borrowing, with a long grace period and minimal interest burden compared with ordinary commercial or development loans. The precise concessionality of the facility, however, will ultimately depend on the terms contained in the financing agreement.

The immediate impact on the public debt stock is more straightforward. Rijkenberg said total public debt stood at E36.03 billion, equivalent to 40.33% of GDP, as at 31 March 2025, excluding arrears and contingent liabilities. Once the US$19.3 million IBRD sovereign loan and US$19.7 million IDA credit are fully disbursed, the minister projected total debt at approximately E36.74 billion, or 41.13% of GDP.

The minister maintained that the additional borrowing remains within prudent debt-management parameters, while pointing to the scheduled retirement of existing obligations. “There are 18 existing external loans that will be fully repaid in the next five years,” Rijkenberg told Parliament, arguing that the progressive reduction of existing obligations would help prevent the new financing from placing disproportionate pressure on government expenditure.

The US$26 million EPTC facility creates a different type of fiscal exposure. Under the proposed guarantee, government will guarantee EPTC’s obligations to IBRD up to the full US$26 million. Rijkenberg told Parliament that “the government guarantee covers the full loan obligations of EPTC to IBRD, up to a maximum of 26 million US dollars,” meaning the state could ultimately be required to meet the obligation if the corporation fails to do so.

The guarantee will be charged against the Consolidated Fund and government assets, although the government expects EPTC to meet its obligations from its own operations. Rijkenberg said the project’s business turnaround and financial stabilization measures are intended to strengthen the corporation’s capacity to service the loan, adding that, “provided that EPDC duly fulfills these obligations, the guarantee shall not be called upon and no additional burden will be imposed on the consolidated fund.”

That assumption makes EPTC’s financial recovery a material component of the overall fiscal equation. The US$26 million facility is intended to support the corporation’s financial stabilization and its transition from a legacy defined-benefit pension fund to a modern defined-contribution pension scheme. The minister described the recapitalization as critical to resolving EPTC’s operational viability and positioning the corporation as a key enabler of the broader digital infrastructure program.

The cost of the financing also extends beyond the headline principal amounts. The US$19.3 million IBRD sovereign loan carries interest calculated at the applicable reference rate plus a variable spread, together with a 0.25% front-end fee and a 0.25% annual commitment charge on the undrawn balance. The loan is structured around 40 equal and consecutive semi-annual installments of 2.5% of principal, meaning each installment would represent US$482,500 once repayment begins, assuming the repayment structure presented to Parliament remains unchanged.

The EPTC loan carries similar financing charges, including interest based on the reference rate plus a variable spread, a 0.25% front-end fee, and a 0.25% annual commitment charge on the undrawn balance. Its repayment schedule provides for 36 semi-annual installments beginning in June 2034 and running through December 2051, giving EPTC several years before principal repayments commence.

Beyond the debt structure, the financing is intended to fund a broad digital infrastructure program. Rijkenberg told Parliament that the project would deploy optical fiber to connect tinkhundla centers, health facilities, and schools; extend last-mile broadband; and seek to reduce the cost of accessing government services.

The project also includes regulatory reforms, including revision of the Communications Act, the introduction of open-access regulations, and a price glide path intended to stimulate competition and improve broadband affordability. For households and businesses, the financial significance of these reforms will ultimately depend on whether increased competition translates into lower connectivity costs and wider access.

The government also plans to digitize priority services, including business registration, tax filing, health referrals, telemedicine, education enrollment, and social transfer verification. The project is further expected to establish digital identity infrastructure, a government-wide electronic payment gateway, interoperable data exchange platforms, and cybersecurity and network-operations capabilities.

The investment has a human-capital component as well, with the government targeting 200,000 citizens for advanced digital skills training over the project period. Rijkenberg linked the investment to the country’s employment challenge, stating that youth unemployment stood at approximately 46% and arguing that digital skills investment was necessary to create pathways into the digital economy.

The scale of the financing means the project’s economic return will be as important as its debt cost. While the government has framed the investment as part of its Digital Transformation Agenda and its broader objective of achieving inclusive economic growth, the financial test will be whether the infrastructure and services created generate measurable productivity gains, reduce transaction costs, and improve the efficiency of government and private-sector activity.

Rijkenberg said the financing would advance the country’s digital agenda in line with the National Development Plan and the Government Programme of Action, which targets inclusive economic growth of 12% by 2028/29. The challenge for government will be converting that policy ambition into measurable economic returns while managing both the direct debt added to the sovereign balance sheet and the contingent exposure created by the EPTC guarantee.

The three bills, therefore, place a clear financial value on Eswatini’s digitalization program: US$39 million in new direct borrowing and a further US$26 million in sovereign-backed exposure. The immediate debt increase may remain within the government’s stated fiscal thresholds, but the longer-term value of the transaction will depend on whether the financed infrastructure, digital services, and EPTC restructuring deliver sufficient economic and operational gains to justify the obligations assumed by the state.