VZCZCXRO7762
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHMB #0035/01 0260800
ZNR UUUUU ZZH
R 260800Z JAN 10
FM AMEMBASSY MBABANE
TO RUEHC/SECSTATE WASHDC 3878
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

UNCLAS SECTION 01 OF 02 MBABANE 000035 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EB/IFD/OMA (BSANDERS); AF/S (MHARRIS) 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EAID PGOV PREL WZ
SUBJECT: SWAZILAND FISCAL TRANSPARENCY 2010 REVIEW 
 
REF: STATE 001923 
 
¶1. (SBU) This cable responds to reftel's request regarding 
information on Swaziland's fiscal transparency and USG FY2010 
assistance. 
 
¶2. (SBU) Under the FY 2010 SFOAA, Swaziland is allocated $100,000 in 
IMET funding, which is not provided directly to the Ministry of 
Defense but pays for expenses related to a variety of training 
programs for the Umbutfo Swaziland Defense Force personnel. 
Additional funding is utilized for training security officers at the 
USG-funded International Law Enforcement Agency (ILEA) in Gaborone. 
The USG President's Emergency Program for AIDS Relief (PEPFAR) has 
allocated 28.8 million USD to Swaziland for FY 2010 programming to 
fight the highest incidence of HIV/AIDS incidence in the world. 
This funding overwhelmingly goes to non-governmental partners, but 
includes some assistance to the Ministry of Health and the National 
Emergency Response Council on HIV/AIDS (NERCHA), primarily in the 
area of human resources and management.  Public Affairs exchange 
programs include some persons in government positions.  Other 
limited USG  funding goes to small community organizations for 
self-help projects, local schools for scholarships, and 
non-governmental organizations for projects from water retention and 
agricultural self-sustainability to civic education, rule of law and 
good governance, which has included building the capacity of 
parliament to analyze legislation and respond to its constituents. 
 
¶3. (SBU) The government of Swaziland (GKOS) makes its annual budget 
publicly available in book form, as well as supplemental budget 
documents.  These documents are not provided online. 
 
¶4. (SBU) Incomes and expenditures are included in the 
publicly-available budget.  The GKOS held a series of public 
stakeholder meetings to respond to questions about both the annual 
budget and mid-year budget policy review. 
 
¶5. (SBU) The published budget is meaningful and details revenues and 
most expenditures, although challenges remain within sections of the 
budget to discern which might be royal expenditures. 
 
¶6. (SBU) Expenditures on the royal family fall under three main 
budget sections, or "heads" in Swazi budget terms: 1) Head 01 - 
Statutory Expenditure, which includes salaries; 2) Head 51 - Swazi 
National Treasury, which includes payments for the traditional 
courts and advisory committees; and 3) Head 60 - Central Transfers, 
which includes funds for the upkeep of the royal residences. 
Payments for royal travel generally fall under the Ministry of 
Foreign Affairs section of the budget.  The royalty also has 
enormous "private" wealth from ownership in numerous parastatals and 
corporations, investments, and income from land holdings.  When the 
king's advisors are asked  about lavish expenditures, the common 
response (except for obviously state-related events) is that the 
king pays for them from his private holdings. 
 
¶7. (SBU) When discussing the budget with Post, Finance Ministry 
Principal Secretary Dumisani Masilela stated that reviewing Swazi 
National Treasury monies is not a core government function, and that 
it is unclear how the king's office uses this money.  Internal 
budget discussions on the Swazi National Treasury section are brief 
and vague when setting budget limits and expenditures.  The 2009/10 
budget estimate for the Swazi National Treasury was 99,248,000 
emalangeni (13,233,066 USD). 
 
¶8. (SBU) Supplemental budgets, generally passed at the end of the 
fiscal year, primarily serve to reallocate funds among ministries 
that had money left over and those who had overspent, but also to 
reflect increases in expenditures on items such as royal travel. 
Such publicly-available supplemental budgets make analysis of the 
initial budget more challenging, but do not pose insurmountable 
problems regarding the budget's transparency. 
 
¶9. (SBU) Since the 2009 review, Southern African Customs Union 
(SACU) receipts, which accounted for approximately 60 percent of 
government's revenue, have dropped dramatically.  For FY 2010, 
Swaziland's receipts were cut from 6 billion emalangeni (800 million 
USD) to 1.9 billion emalangeni (253 million USD), due to losses in 
customs revenue and Swaziland's obligation to repay overpayments by 
SACU in previous years.  The resulting budget gap has caused 
government to review expenditures with greater scrutiny, reduce 
current year budgets, and focus more attention on auditing. 
 
¶10. (SBU) The Finance Ministry has put forward two bills that would 
increase transparency in procurement and public finance.  A 
procurement bill, currently before cabinet, would provide necessary 
reform to government's procurement system.  The Public Finance 
Management Act would update a 1967 law and impose more reporting 
requirements on the ministries, as well as yearly strategic plans. 
 
¶11. (SBU) Anti-corruption efforts by GKOS have intensified over the 
past year.  The Anti-Corruption Commission, which was created in 
 
MBABANE 00000035  002 OF 002 
 
 
2006 but has only had a commissioner since March 2008, reported an 
increase in the number and quality of cases reported to the 
Anti-Corruption Commission, largely due to news of corruption 
arrests and reports.  A media campaign to sensitize the public to 
the Commission's work and encourage the citizenry to report cases is 
currently underway. The Commission has not been able to bring a case 
to court yet. 
 
¶12.  (SBU) Embassy Mbabane will continue to work directly with the 
Government of the Kingdom of Swaziland (GKOS) to promote 
improvements in fiscal transparency, more fully implement 
transparency and anti-corruption tools it currently possesses, and 
engage the king's office to provide greater transparency in the area 
of expenditures on the royal family.  Embassy Mbabane intends to: 
 
- Utilize contacts within the Finance Ministry, Economic Planning 
and Development Ministry, Foreign Ministry, and Anti-Corruption 
Commission to educate GKOS on the need to address fiscal 
transparency as a way to combat misuse of funds, improve its budget, 
and empower its citizenry, as well as avoid the possibility of 
losing USG development assistance. 
 
- Urge the GKOS to respond meaningfully to the findings of the 
annual Auditor General's reports and the parliamentary Public 
Accounts Committee's (PAC) findings; 
 
- Support GKOS efforts to combat corruption through its 
Anti-Corruption Commission (ACC) and public education program (PEP), 
and to start prosecutions of corruption cases.  Reigning in 
corruption will have a significant benefit to fiscal transparency 
and accountability. 
 
- Encourage the GKOS to institute an end-of-year outreach program to 
inform civil society on the state of its budget expenditures after 
passage of supplemental budgets, and motivate civil society groups 
to focus on the budget in their activities and discussions with 
government. 
 
- Engage the king's office to consider itemizing more of the 
expenses associated with the Swazi National Treasury. 
 
- Continue implementation of the 2009 PEPFAR Partnership Framework, 
which outlines areas of collaboration in regard to Swaziland's 
response to HIV/AIDS from 2009-2013, in order to support greater 
transparency in health expenditures.  Through this Partnership, the 
PEPFAR team will continue to engage the Ministry of Health, NERCHA, 
other donors and stakeholders to coordinate resource allocations, 
eliminate duplication, and increase transparency in the use of funds 
to combat HIV/AIDS. 
 
¶13.  (U) Post will inform the GKOS and the king's office that future 
development assistance from the United States is at risk if they do 
not take concerted steps to increase transparency, and that post 
personnel are available to assist in the process. 
IRVING