The loan was agreed in 2011 as Swaziland grappled with an acute funding crisis. South Africa was due to release the first tranche of the bailout last year but the money never materialised.
"It would seem that it's not working out," Finance Minister Majozi Sithole told Reuters, citing additional conditions set by South Africa.
"If we can't get it because of any complications it's not a train smash for Swaziland. We will live without it."
South African Finance Minister Pravin Gordhan told parliament in August that Pretoria would release the first 800-million rand subject to its neighbour meeting certain fiscal and technical conditions.
The deal had initially hit problems when Swaziland – Africa's last absolute monarchy – objected to Pretoria's demands for political and economic reforms in the southern African kingdom, criticised internationally over its ban on political parties.
The budget crunch, triggered by a sharp decline in receipts from a regional customs union, caused unprecedented protests against Swaziland's King Mswati III, who has at least a dozen wives and a personal fortune estimated at $200-million. – Reuters