S.Africa hopes Swaziland bailout will usher change: minister

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South Africa's finance minister Thursday defended a controversial $355-million bailout for Swaziland and said he hoped it would encourage democratic shifts in Africa's last absolute monarchy.

South Africa has come in for criticism over the loan from Swazi activists, who had lobbied Pretoria to withhold the bailout until Swaziland's King Mswati III agreed to democratic reforms.

"Will this loan encourage genuine change? We hope so," South African Finance Minister Pravin Gordhan told journalists.

"I think it's in the interests of Swaziland that there are changes in that country which are compatible with what the Swazi population wants, which allows for free and open political activity and ... respect for the position of his majesty on the one hand and democratic institutions on the other hand.

"But that's for the Swazi people to actually develop for themselves."

The South African government is acting as guarantor to the 2.4-billion-rand ($355-million, 248-million-euro) loan from the country's Reserve Bank to the central bank of Swaziland, backed by payments from a regional customs union.

Gordhan said the loan would be paid out in three stages, each conditional on fiscal reforms agreed by Swaziland and the International Monetary Fund (IMF).

"All of those things will have to be delivered as each tranche requires," he said, adding that political changes were also part of the deal.

The loan also requires Mswati to open dialogue on political reforms in the tiny landlocked kingdom, which neighbours South Africa.

"We must reiterate that it's not in South Africa's interest to have a collapsing Swaziland economy," said Gordhan.

Swaziland has been battling to stay solvent after losing 60 percent of its revenues from a regional customs union, the government's main source of income, last year.

Dissidents want Mswati to legalise political parties, which were banned in 1973, and commit to a transitional government and elections within four years.

© 2011 AFP

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