SACU RECEIPTS BOOST RESERVES

MBABANE – The country’s gross official reserves were recorded at E9.5 billion at the end of the past month.

This reflected growth of 3.3 per cent from March 2021 and 16.9 per cent over the year. According to the monthly statistical release from the Central Bank of Eswatini, the month-on-month increase was as a result of the quarterly Southern African Custom Union (SACU) receipts at the beginning of April 2021.

Reserves

In line with the increase in reserves, the import cover rose from 4.0 months recorded in March to 4.1 at the end of the past month. Valued in special drawing rights (SDR), the reserves amounted to SDR457.2 million at the end of April, higher by 4.0 per cent relative to the previous month and 40.3 year-on-year. One common rule is that reserves that can cover three months worth of imports are adequate. Reserves are simply the foreign currencies held by a country’s central bank. There are several reasons why banks hold reserves. The most important reason is to manage their currencies’ values. The critical function is to maintain liquidity in case of an economic crisis.

Extended

Meanwhile, credit extended to the private sector declined by 1.6 per cent month-on-month but grew by 9.3 per cent over the year to settle at E15.3 billion at the end of March 2021. The fall over the month was evident in credit to businesses and other sectors of the domestic economy. However, credit to households and non-profit institutions serving households (NPISH) increased slightly. Credit extended to businesses, on the other hand, amounted to E6.1 billion at the end of March this year, representing a decline of 3.1 per cent over the month and 1.8 per cent from the previous year.

Distribution

The month-on-month decline in credit to businesses was discernible in distribution and tourism as well as agriculture and forestry sectors by 9.9 per cent and 5.2 per cent, respectively. Against this backdrop, however, growth was observed in the following subsectors: construction (8.4 per cent); mining and quarrying (2.9 per cent); community, social and personal services (5.3 per cent); transport and communication (1.8 per cent), real estate (1.0 per cent) as well as manufacturing (0.2 per cent). Credit to other sectors reflected a month-on-month fall of 2.7 per cent and growth of 54.2 per cent year-on-year to reach E1.9 billion at the end of March 2021.

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