If conditions are met, the first R800-million of a R2.4-billion loan will be paid to King Mswati III's state in September, according to Finance Minister Pravin Gordhan, responding to a parliamentary question yesterday.

The bailout conditions include political and economic reforms and measures to ensure the money is spent in the right way. King Mswati III has long been criticised for his lavish lifestyle in a country dogged by poverty.

Cosatu is, in principle, opposed to the loan, with spokesman Patrick Craven yesterday saying the trade union federation did not support the idea of giving financial assistance to countries that undermine democratic rights.

Political parties are banned in Swaziland and the king has a number of pet projects that have been detrimental to the national budget. One of these is a second international airport in a country smaller than Gauteng.

Unions in South Africa have been vocal in supporting striking public- sector workers in Swaziland, where the bloated civil service is one of the main concerns for budget hawks.

The National Treasury was quick to rectify media reports that the loan would definitely be paid out.

"Negotiations by financial authorities of the two countries are still under way," said spokesman Jabulani Sikhakhane yesterday.

"The September 2012 reference in the minister's reply to the parliamentary question was in terms of an intended payment schedule, which, as the minister's response makes clear, was subject to the conclusion of negotiations by financial authorities of the countries."

The loan was negotiated a year ago when the Swaziland government faced a funding crisis caused by a slump in revenues from the Southern African Customs Union.

The union usually accounted for two-thirds of Swaziland's income.

The loan was not immediately signed by Swaziland because of its objections to Pretoria's conditions.

Earlier last year, the kingdom was unable to secure funding from the International Monetary Fund.

The two countries signed a memorandum of understandingin June this year.

The final loan agreement has not yet been signed.

Gordhan said, if agreed, Swaziland would repay the loan over a five-year period, starting in 2015, by means of a debit order placed on its revenue shares from the customs union.

King Mswati III - whose personal fortune is estimated at R1.68-billion - faced unprecedented protests 18 months ago when his appointed administration ran out of money after recession hit South Africa. - Additional reporting Reuters