Mbabane: The Central Bank of Eswatini has announced that the interest rate for the second quarter of the 2021/22 financial year should remain at 3.75%. This is according to a report issued by the Eswatini Monetary Policy Consultative Committee (MPCC).
The report states that “the Eswatini economy grew by a seasonally adjusted 9.0% year on year in the first quarter of 2021 from 3.3% in the previous quarter. This has been attributed to a strong economic performance in the second quarter. The Gross Domestic Product (GDP) grew by 3.8% in the second quarter of 2021 compared with 0.8% in the first quarter. On a year-on-year basis, the secondary sector rebounded from a 0.6% contraction in the fourth quarter of 2020 to record a 21.0% growth in the first quarter of 2021. The tertiary sector grew by 5.8% on a year-on-year basis in the first quarter of 2021, from 4.5% in the previous quarter. The primary sector grew from a 1.3% growth in the last quarter of 2020 to a 4.3% growth in the first quarter of 2021.”
This means that banks are expected to maintain the prime lending rate on loans extended to individuals and businesses at 7.25 % until the next monetary policy meeting. The Governor disclosed that credit extended to the private sector increased by 0.3% at the end of July 2021 compared to the previous month to settle at E16 Billion. The month-on-month improvement was due to a rise in credit to the other sectors of the economy and households and non-profit institutions serving households (NPISH) sector.
Credit extended to businesses declined by 0.5% to reach E7.0 Billion at the end of July 2021 while credit to households and non-profit institutions serving households serving closed at E7.5 Billion at the end of July 2021, reflecting an increase of 0.4 %. Credit extended to other sectors of the economy grew by 3.4% in July 2021to settle at E1.5 Billion. Non-performing loans rose by 2.4 % month on month to settle at E 763.6 Million at the end of July 2021.
The bank expects the cost of goods and services to continue increasing moderately over the year 2021 with inflation forecasted to average 3.94% from 3.90% forecasted in July 2021.
The country’s stock of reserves is at E8.8 Billion, enough to cover an estimated 3.7 months of imports. Preliminary figures show that total public debt stood at E26.3 Million as at end of August 2021, a 3.0 % expansion compared to the previous month. Total public external debt stood at E 10.6 Billion while total domestic debt stood at E15.7 Billion.
The rollout of the Covid19 vaccine in the Kingdom of Eswatini is expected to boost business and consumer confidence and fast-track the economic recovery.