Swaziland has faced a significant fiscal crisis since 2010, in the wake of loss of transfers from the Southern African Customs Union (SACU). The fiscal crisis has led to increasing vulnerabilities, not only of public finances but also on commercial banks and the private sector. This paper provides an analysis of Swaziland's main macroeconomic vulnerabilities and the main policy implications of the analysis.

IMF staff have recently sought to clarify when capital controls could be a part of the toolkit to manage large capital inflows. In doing so, considerable emphasis has been laid on the need to ensure that controls in fact achieve their intended objectives. The paper reviews the theoretical rationale and empirical evidence for the effectiveness of controls and related measures, with an emphasis on experiences in the past decade. New research by staff on these issues is summarized. The result...