South Africa has denied a report that it approved a $1.2 billion loan for its neighbor, cash-strapped Swaziland.

The South African Finance Ministry, in a statement Tuesday, confirmed that Swaziland has requested a loan, but said “no loan has been agreed to or granted.”

The ministry said the two countries are holding “technical discussions” about possible assistance.

The Swaziland Communist Party said this week that South Africa plans to bail out Swaziland and its leader, King Mswati, Africa's last absolute monarch.

Rights groups have strongly criticized the king for leading a lavish lifestyle while most of his citizens live in poverty.

On Monday, Swaziland's finance minister, Majozi Sithole, said salaries for civil servants could be delayed or cut in half in coming months if the country is unable to obtain loans.

Sithole said a loan application to the African Development Bank was unsuccessful although he said the government was working to meet budget cuts demanded by the International Monetary Fund.