Mbabane – Gross official reserves have dropped to E8.2 billion, their lowest level since early last year, according to the latest monthly report from the Central Bank of Eswatini. The steep 12.6 per cent month-on-month fall in May 2025 was largely driven by net outflows of rands from local banks and government payments, with the import cover sliding to 1.9 months by June 2025 from 2.1 months in May.
Despite the declining reserves, credit extended to the private sector grew to E21.6 billion in May, marking a 1.5 per cent increase from April and 9.2 per cent higher than a year ago. The central bank attributes the increase to higher credit uptake by businesses and other domestic sectors, although lending to households fell during the same period.
Household credit dipped from E8.7 billion in April to E8.6 billion in May, representing a 1.4 per cent monthly drop but a modest 0.2 per cent rise on an annual basis. The decrease was mainly due to a 4.3 per cent reduction in personal unsecured loans, even as vehicle and mortgage loans recorded slight growth.
Businesses saw improved access to credit, which climbed by 3.4 per cent month-on-month and 18.7 per cent compared to May last year, reaching E12 billion. Manufacturing, distribution, construction, and agriculture were among the sectors that expanded their borrowings, while sectors like community services, mining, real estate, and transport contracted.
Large enterprises remained the main beneficiaries, accounting for E8.3 billion of the total business loans, while small and medium enterprises (SMEs) accessed E3.7 billion, translating to 69 per cent and 31 per cent shares respectively.
Government balances with the banking sector increased significantly to E2.2 billion in May, doubling from E1.1 billion in April. The increase came after the government received an advance from the Central Bank, while government deposits declined by 9 per cent to E6.1 billion due to fiscal payments.
Broad money supply (M2) also rose slightly to E23.8 billion in May, up 0.7 per cent from April and 3 per cent year-on-year. This growth was largely driven by quasi money, which grew by 3.7 per cent during the month to E14.7 billion, while narrow money (M1) dropped by 3.9 per cent to E9.1 billion.
The banking sector’s liquidity position weakened in May, falling by 5.3 per cent to E7.1 billion from April levels and declining by 3.5 per cent on a yearly basis. The decrease was linked to lower balances held at the Central Bank, reduced government securities, and lower rand holdings, although banks increased their Emalangeni holdings.
Lending rates remained unchanged, with the discount rate stable at 6.75 per cent and the prime lending rate holding at 10.25 per cent by the end of June 2025.
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