Despite a relatively favourable budget position at present, Swaziland is facing a fiscal crisis in the longer term. Broadening the revenue base is vital, as the cur-rent high level of receipts from the Southern African Customs Union (SACU)-which have accounted for a growing share of total revenue-cannot be expected to last indefinitely, and the Economist Intelligence Unit expects these to decline as South African import growth starts to slow over the forecast period. It will not be possible for the government to make up the shortfall because the tax base cannot be widened much further in the forecast period and efficiency reforms within the government ministries will be slow. We estimate the fiscal balance to record a deficit of 0.8% of GDP in 2007/08, owing to poor economic growth and drought-related expenditure. The deficit is forecast to widen further, to 1.8% of GDP in 2008/09 and to 3.8% of GDP in 2009/10, as fiscal reforms fail to cover a probable decline in SACU revenue. The Central Bank of Swaziland will continue to finance the deficits, mainly domestically.