The 3.3 percent decline from August 2022 of the gross official reserves represents 2.5 months’ cover of imports of goods and services. Meanwhile, the Central Bank of Eswatini reveals that credit extended to businesses for the period of August-September was E8 billion which is higher by 1.7% relative to July 2022 and 12.7% year-on-year.
By Avite Mbabazi
The Central Bank of Eswatini (CBE) Monthly Statistical Release for August-September reveals that credit extended to businesses increased by 1.7% relative to July 2022 to stand at E8 Billion. The CBE also raised the discount rate to 6% while commercial banks raised their prime lending rate to 9.5 %.
However, probably most noteworthy in the report is the continuous fall in the CBE Gross Official Reserves which amounted to E7 billion at the end of September, reflecting a fall of 3.3 % from August 2022 and 18.9 % over the year. This represents 2.5 months’ cover of imports of goods and services. The persistent decline in the country’s economic buffers is attributed to a net outflow of foreign currency from trades with local banks in addition to payments of the government’s fiscal obligations over the month under review.
Meanwhile, credit extended to businesses for the period August-September was E8 billion which was higher by 1.7% relative to July 2022 and 12.7% year-on-year. The increase in credit to businesses was recorded in the following subsectors; distribution & tourism (12.8%), real estate (3.4%), construction (0.6%), and community, social & personal service (0.6%). On the other hand, a decline was observed in the followings subsectors; agriculture & forestry (-10.6 %), mining & quarrying (-3.8 %), transport & communications (-1.8 %) as well as manufacturing (-1.4 %).
The Release also notes that although credit to local government increased by 9.7%, credit extended to other sectors contracted by 8.4% month-on-month and 48.0% year-on-year to settle at E773.8million at the end of August 2022. The decrease was observed in credit to other financial corporations and public non-financial corporations, which fell by 12.1 % and 3.5 %, respectively.
Narrow money supply (M1) stood at E7.8 billion at the end of August 2022, showing a month-on-month decline of 4.8% but an increase of 0.4% year-on-year. This decline is said to have been evident in both components of M1; Emalangeni outside depository corporations such as banks and demand deposits, which receded by 12.0% to E673.6 million and 4.1% to E7.1 billion, respectively.
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