Ezulwini – The Governor of the Central Bank of Eswatini (CBE) Dr Phil has urged the financial sector to take a more strategic role in developing an export-driven economy, warning that despite stable monetary conditions over the past year, the country’s long-term stability depends on its ability to generate sustained foreign exchange, starting with empowering MSMEs to penetrate regional and global markets.
Presenting the 2025 Financial Stability update,Dr Mnisi said financial conditions have eased over the 12 months period to June 2025, following a cumulative 75-basis-point cut in the discount rate to 6.75 percent. The reduction, he said, supported domestic credit activity and cushioned economic performance amid global uncertainty.
Mnisi noted that the CBE had revised its short-term inflation forecast slightly downwards to 3.2 percent for 2025, citing lower food inflation, a stronger exchange rate assumption and stable global oil prices. The Lilangeni also strengthened from 18.41 per US dollar in June 2024 to 17.74 in June 2025, occasionally touching levels below 17, a development he described as historic after a long time. However, he cautioned that volatility remains a major risk, particularly given evolving South Africa–US geopolitical dynamics.
Despite marginal improvements, Dr Mnisi said the fiscal pressures remain a central systemic concern.
Government revenue for 2025/26 is projected to rise to E29.73 billion, but certain receipts are expected to decline sharply by over 20 percent, intensifying strain on public finances.
Expenditure is projected to grow by 8.5 percent to E32.61 billion, widening the fiscal deficit to E2.88 billion, or 3 percent of GDP.
“This continued deficit erodes contingency buffers, increases borrowing needs, and elevates sovereign liquidity risks with spillovers to the banking sector,” he warned.
Public debt rose to 40.3 percent of GDP by June 2025, driven largely by increased domestic borrowing.
Mnisi also highlighted potential external shocks, including the non-renewal of AGOA, which could hit the manufacturing sector, particularly textiles and apparel, and reduce foreign currency inflows. This, he said, underscores the urgency of diversifying export markets and strengthening economic resilience.
Crucially, he called for a strategic shift to an export-driven economic model anchored by small businesses.
“I really believe that as a country, unless we drive an export-driven economy, we are not going to be able to sustain and grow our reserves,” Dr Mnisi said.
“We need to start thinking strategically with the financial sector about how we drive the export sector so that we can grow and generate foreign exchange, starting with MSMEs instead of always relying on foreign direct investment,” he added.
Dr Mnisi then urged financial institutions to rethink their role in supporting emerging exporters, particularly in agro-processing, ICT and renewable energy, where global demand is rising and localisation presents new opportunities.
On the household front, the CBE noted a 3.8 percent growth in household credit between June 2024 and June 2025, supported by easing inflation, stable employment and lower borrowing costs.
Motor vehicle loans rose by 15.5 percent and unsecured credit by 6.9 percent. However, risks remain elevated, with imported inflation, climate-related shocks and global supply disruptions all exerting pressure on household repayment capacity.
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