NOTABLE DECLINE IN NET FOREIGN ASSETS

MBABANE - The country’s net foreign assets were recorded at reduced E8.9 billion at the end of May this year.

This is per a report from the Central Bank of Eswatini (CBE) covering the period May and June this year. The figures represent a contraction of 20.2 per cent from the previous month and 0.8 per cent year-on-year. According to Investopedia, net foreign assets (NFA) determine whether a country is a creditor or debtor nation by measuring the difference in its external assets and liabilities. NFA refers to the value of overseas assets owned by a nation, minus the value of its domestic assets that are owned by foreigners, adjusted for changes in valuation and exchange rates.

According to the CBE report, net foreign official assets reflected a reduction of 28.1 per cent from April 2021 and 12.0 per cent year-on-year to reach E5.8 billion at the end of May. The month-on-month contraction in net foreign official assets was mainly on account of payment of government’s fiscal obligations as well as outflows from foreign exchange trades between the central bank and commercial banks. Net foreign assets of other depository corporations stood at E3.1 billion at the end of May this year, representing a marginal growth of 0.04 per cent over the month under review and 29.4 per cent compared to May last year. Net foreign assets valued in special drawing rights (SDR) amounted to SDR447.9 million, 16.4 per cent lower than the previous review month but 19.9 per cent higher compared to May 2020. Analysts say if a net foreign assets metric is positive consistently and substantially, it is likely to increase the relative foreign exchange value of the currency, as it indicates a strong overall economy.

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