Eswatini - Country Partnership Framework for the Period FY24-28 (English)

The Kingdom of Eswatini, a small, trade dependent country in Southern Africa aims to break out of a low growth, high poverty, and high inequality equilibrium. The country has reached a turning point in its development and urgently needs to reduce the heavy reliance on public sector investment that emerged after the end of apartheid in South Africa. The rapid growth experienced from 1980 to 1995 fueled by investment from South African firms relocating to Eswatini during apartheid dropped sharply after 1996 as firms returned to South Africa, revealing structural challenges, including a narrow economy and export base overdependent on sugar. As a result, annual gross domestic product (GDP) growth averaged only 1.7 percent between 2011 and 2021. The Government's high reliance on volatile Southern African Customs Union (SACU) revenue has undermined fiscal management and contributed to domestic arrears, deficits, and debt, especially in the context of greater financing needs to respond to Coronavirus disease 2019 (COVID-19). This Country Partnership Framework (CPF) for FY24-28 supports Eswatini's shift to a more private-sector driven economic growth model that can create jobs and promote inclusive, sustainable, and resilient economic growth. The CPF deepens engagement from the previous country strategy in restoring macro-fiscal stability, fostering private sector-led growth, and addressing health challenges, and supports new lending in basic education, skills development, and public spending efficiency. The CPF will support a flexible lending program building on a substantial active International Bank for Reconstruction and Development (IBRD) portfolio, with modest lending in the CPF's early years in line with a gradually strengthening partnership.