IMF Impressed By Eswatini’s Financial Sector

By Ntokozo Nkambule

The International Monetary Fund (IMF) has described the country’s financial system as ‘sound’.

The financial organization noted that the banking system is generally well-capitalized and liquid, and most banks’ non-performing loans appear to have peaked and are starting to decline.

The IMF has been in the country on a working visit from February 27, 2023, to March 10, 2023. The intention of the visit was to conduct discussions for the 2023 Article IV Consultation with a broad range of counterparts from the public and private sectors. The discussions covered the performance of Eswatini’s economy since the COVID-19 pandemic and the future policy challenges.

In a media briefing, the IMF observed that Non-Bank Financial Institutions (NBFIs) have been increasingly active, accounting for almost half of the total household credit in Q2, 2022, and also accounts for 70% of the entire financial system assets.

The International Fund, however, cautions the country to keep an eye on the global and regional economic environment.

“However, prolonged macroeconomic imbalances, a volatile global and regional economic environment, and the potential for additional shocks call for continued efforts to monitor and manage financial stability risks and advance financial sector reforms.”

Furthermore, the IMF noted that the country should look at facilitating private investment and also strengthening competitiveness in a quest to lift economic growth and reduce unemployment.

“Facilitating private investment and strengthening competitiveness will be essential to lift growth and reduce unemployment. Continued efforts are needed to streamline licensing requirements and property registration, establish a one-stop shop for businesses, bolster protection of investor rights (e.g., contract enforcement, property, and investor rights) enhance the rule of law and effective operation of the commercial court, simplify tax payment procedures, and address high electricity and communication costs.”

The IMF added that gender-based disparities in access to education, healthcare, financial services, ownership of assets, and the labor market prevent women from fulfilling their economic potential—hampering economic growth and development.

As a result, it is imperative that the country addresses these disparities, and enabling women to participate fully in economic activities could play an essential supporting role in the shift to private sector-led economic growth.

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