Mbabane- Eswatini’s gross official reserves edged up to E10.2 Billion in April, offering a modest boost to the country’s external position, but an economists warn the improvement is largely cosmetic, driven by Southern African Customs Union (SACU) inflows rather than sustained economic strength.
Data from the Central Bank of Eswatini’s latest monthly statistical release shows import cover rising significantly. While this signals a marginal improvement in the country’s ability to finance imports, it remains below the internationally recommended threshold of at least three months.
Economists Sanele Sibiya speaking in an interview with Eswatini Tv Market View, said the uptick reflects limited resilience in the external sector, cautioning that the gains are not anchored in broad-based economic performance.
“We remain exposed on both fronts, be it monetary policy or fiscal policy,” he warned, pointing to the economy’s dual vulnerability to external shocks and fiscal pressures.
He noted that the improvement on reserves was largely supported by SACU revenue inflows, rather than export earnings or diversified foreign exchange sources. This, he said continues to highlight a structural weakness in the economy.
“While there is nudge upwards in reserves, it is largely due to SACU receipts,” he explained, adding that this leaves the country vulnerable to shifts in regional revenue distributions.
Eswatini remains heavily reliant on imports, with more than 60 percent of goods consumed in the country sourced externally, increasing pressure on limited reserve buffers when global prices fluctuate or supply chains tighten.
Sibiya also linked the reserve position to the country’s currency peg under the Common Monetary Area, stressing that adequate reserves are essential to maintain stability between the Lilangeni and the South African Rand.
He warned that continued reliance on SACU inflows exposes both monetary and fiscal systems to instability, particularly if regional transfers decline or fluctuate.
“Such vulnerability means we need to diversify our reserve position and strengthen export-led foreign exchange earnings,” he said calling for structural reforms to reduce dependence on SACU revenues.
Overall, despite the marginal improvement, economists caution that Eswatini’s import cover remains below safe levels, leaving the economy exposed to external shocks and underscoring the urgency of broadening its economic base.
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