By Phiwa Sikhondze
The Central Bank of Eswatini (CBE) has reported a significant increase in non-performing loans (NPLs) within the banking sector, reaching E1.2 billion in May 2024.
This represents a 7.5% month-on-month growth, according to the Monetary Policy Statement released on July 19, 2024 by the CBE.
The increase in NPLs was observed across all sectors, indicating widespread financial stress among borrowers. This development is concerning as it suggests rising difficulties in loan repayments, which could impact the stability of the banking sector.
Despite the rise in NPLs, private-sector credit showed signs of recovery. Credit extended to the business sector amounted to E10.1 billion in May 2024, reflecting a month-on-month increase of 4.5%. Meanwhile, credit to households and Non-Profit Institutions Serving Households (NPISH) grew marginally by 0.2%, closing at E8.6 billion.
In addition to the rise in NPLs, the report highlighted other key economic indicators. The country’s annual consumer inflation increased to 4.4% in June 2024 from 4.1% the previous month, driven by higher costs in transport, food, alcoholic beverages, and tobacco.
However, decreasing rates of growth were noted in the price indices for clothing & footwear and household furniture & maintenance.
The CBE Governor, Dr. Phil Mnisi, emphasized that the CBE will continue to monitor both international and domestic developments influencing monetary policy.
“The Bank will act appropriately in line with its mandate to ensure financial and price stability,” Dr. Mnisi stated.
The Monetary Policy Statement also noted that the CBE decided to maintain the discount rate at 7.5% and the prime lending rate at 11.0% for loans extended to individuals and businesses, aiming to support economic growth while managing inflationary pressures.