The year 2012 presents an important opportunity for the government of Swaziland to utilise judiciously the projected large increase in Southern African Customs Union (SACU) receipts. The right fiscal measures, if accompanied by decisive reforms, could put the economy on a path of strong and inclusive growth. It is also a chance for Swaziland to draw on its strengths, including its strategic location, relatively diversified production base, and skilled labour force. For Swaziland, 2011 was a challenging year. Real GDP grew by 1.1% while the 12-month inflation reading hit 7.8% in December. The country faced a severe fiscal crisis, due to a sharp fall in SACU receipts, an historically high level of expenditures (especially wages), and the government’s limited access to borrowing. The crisis led to cuts in capital and social spending, undermining future growth. With government arrears of about 4% of GDP at the end of 2011, including debts to private contractors, the crisis has hurt an already struggling labour market and made things worse for small and medium enterprises (SMEs).