Mbabane, 7 December 2010 (IRIN) - Swaziland's declining revenue and a refusal to shelve prestige projects in the face of growing unemployment is exerting pressure on public health services and food production.

The government recently conceded that unemployment was running at 40 percent, despite doggedly maintaining for many years that it was 26 percent, but economists expect this to rise, pushing up already high poverty levels - about two-thirds of Swazis live in chronic poverty.

Subsistence farmers on communal Swazi Nation Land, where about 80 percent of the country's one million population reside, use government tractors for ploughing, but government fuel depots have run dry and the machines are standing idle.

"This is planting season. It is December now, and for six weeks we have not been able to get seeds in the ground," Joshua Mnisi, a farmer in the central Manzini region, told IRIN.

Renting a government tractor costs about US$19 an hour, but private contractors charge twice as much. The extent of the impact on food production will only be known once a food assessment survey is undertaken in 2011.

Swaziland has the world's highest HIV prevalence  rate - 26.1 percent – so one in four Swazis between the ages of 15 and 49 is living with the virus, and about half of those infected, or 110 000, are on antiretroviral (ARV) drugs, which can prolong a person's life.

Prime Minister Sibusiso Dlamini told the National Emergency Response Committee (NERCHA) that the budget for HIV/AIDS would be cut by 10 percent in 2011, just as efforts to intensify the roll-out of ARVs gets underway.

"The ARV rollout is a big budget expense, and the focus of our efforts. What happens now that government has less money to spend on life-saving measures?" said AIDS activist Vusi Kunene.

Public worker retrenchments

A spate of company closures from timber plantations to garment factories resulted in widespread retrenchments in 2010. The government is the country's largest employer, but a drop in revenue from sources such as the Southern African Customs Union (SACU) of about 70 percent compared to 2009, led Prime Minister Sibusiso Dlamini to warn that the financial squeeze could lead to public workers' salaries not being paid.

SACU - the world's oldest customs union, comprising Botswana, Lesotho, Namibia, South Africa and Swaziland - applies a common set of tariffs and disproportionately distributes the revenue to member states and has provided an economic lifeline to both Swaziland and Lesotho.

The International Monetary Fund (IMF) recommended that the government cut its workforce by a third, or 10,000 employees, because the number of workers on the payroll was disproportionate to the country's size. Political opposition groups have blamed patronage and nepotism for the inflated payrolls.

Government has announced a reduction of 7,000 public service jobs in 2011.

The lay-off of public workers is expected to be cushioned by retirement packages, but the impact of such a substantial number of people being retrenched will have a ripple effect throughout the economy.

"This will result in the consumption rate of our goods and services falling due to less demand, and we will be affected one way or the other," said Fikile Nkosi, managing director of a major bank.

According to the government's Central Statistics Office, one employed person supports, on average, 10 others.

"The customary method of integrating former civil servants into private life is for them to use their government retirement pensions to open small businesses," said Amos Ndwandwe, an economist at a bank in the capital, Mbabane. "It takes years to make a successful business and many fail under normal circumstances, but it is complicated now because higher unemployment means fewer customers."

Numbers of poor increasing

However, government spending on non-essential programmes has not been cut. A recent request by the finance minister for an additional $50 million towards the building of an international airport was approved by parliament and the airport's final cost is expected to be in the region of $1 billion.

Cabinet officials have also awarded themselves substantial pay rises, and have extended retirement benefits to former government officials, contrary to IMF recommendations that public sector wage raises be curtailed. Swaziland is ruled by sub-Saharan Africa's last absolute monarch, King Mswati III.

"For decades government has paid lip service to poverty eradication while concentrating on investment in capital projects. The result is that while a Swazi middle class has expanded, this is just inertia brought on by population growth, because the number of poor has expanded also," Ndwandwe said.

"In terms of proportion, the numbers are the same as what the UNDP [UN Development Programme] reported in the 1990s - about two-thirds of the people live on one dollar a day - there has not been a dent really in those who live in chronic poverty," he noted

"All indications are that the percentage is going to change - as more business shut and public sector workers are laid off, it is inevitable that more people will join the ranks of the poor."