There was general amusement at Court B of the High Court on Thursday last week when Justice Ota asked the government attorney why he had not provided copies of the cases that he was relying on.
Attorney: Ah, well, we have a little problem in government, you see, there is no money.
Judge: I expect copies of these cases on my desk by the end of the day.
Attorney: Yes, certainly, my Lady...I will have to incur out-of-pocket expenses.
This resulted in riotous laughter from the gallery and the bench itself.
But all jokes aside, it seems that government is facing a cash crisis and that, unless urgent measures are taken, this will have serious implications for the already-scanty services it provides to its people.
In an attempt to bolster its cash reserves, government recently undertook a sale of government bonds. It was able to sell less than a fifth of those on offer. To help explain the reasons for this, I asked an economist (who asked for anonymity) what the inability to sell bonds generally means for governments and I received the following answer:
“Basically, many governments don’t raise as much as they want to but I think it is pretty rare to only get away 1/5 of the target. Failing to raise as much cash as intended is usually a sign that:
(1) the government is too risky for the interest being paid (either too much debt or close to civil war etc), or
(2) the government is not going to repay the principal (the amount loaned), either because it is untrustworthy (unwillingness) or cannot repay (inability), or
(3) the government will repay but it will print a heap of money to survive between now and then, thereby causing hyper-inflation and reducing the real value of the principal (the time value of money).”
Hyper-inflation is not likely in the opinion of Swazi economist Thembinkhosi Dlamini. In an article for IDASA (HERE), he writes:
“It seems from afar that the government has opted for the most unprocedural and unprofessional option of public finance management, which is to continue to sign cheques until the money is finished then suspend government operations.”
So instead of printing money (like Zimbabwe), it seems the authorities will just cut back on services. Justice Ota better start reading cases online.
