Central Bank of Eswatini Keeps Discount Rate Steady Amidst Economic Review

Mbabane – Following a comprehensive review of prevailing economic conditions, the Central Bank of Eswatini (CBE), together with the Monetary Policy Consultative Committee (MPCC), opted to maintain the discount rate at 7.50 per cent. The decision was announced during the Monetary Policy Statement on 28th March 2024, after careful consideration of global, regional, and domestic economic factors.

Globally, the International Monetary Fund (IMF) upgraded its global economic growth forecast for 2024 to 3.1 per cent, citing improved resilience in the USA and several major emerging markets. Despite this, global monetary policy conditions remain restrictive, with headline inflation expected to decrease gradually.

Regionally, South Africa witnessed modest economic growth, with the South African Reserve Bank (SARB) maintaining its growth forecasts. However, inflation in South Africa rose marginally in February 2024.

On the domestic front, Eswatini’s economic activity moderated slightly in the third quarter of 2023, with year-on-year growth standing at 7.7 per cent. Headline inflation in Eswatini decreased to 4.3 per cent in February 2024, driven by lower prices in several key sectors.

Credit to the private sector experienced a slight decline, while the banking sector’s non-performing loans increased marginally. Gross official reserves remained stable at E7.8 billion, providing a healthy import cover of 2.3 months. However, total public debt increased by 3.6 per cent, reaching E34.5 billion by the end of February 2024.

In light of these economic indicators, the CBE anticipates moderate inflationary pressures in 2024 and maintains its inflation forecasts accordingly. Banks are expected to maintain the prime lending rate at 11.0 per cent until the next monetary policy meeting.

Dr. Phil Mnisi, Governor of the Central Bank of Eswatini, reiterated the bank’s commitment to fostering price and financial stability conducive to economic development in Eswatini. The decision to maintain the discount rate reflects a balanced approach aimed at supporting sustainable economic growth while ensuring price stability.

You can find the monetary policy statement here: https://www.centralbank.org.sz/wp-content/uploads/2021/04/MPCC-Statement-March-2.pdf