IMF SDR ALLOCATION BOOSTS ESWATINI RESERVES

MBABANE – The country’s gross official reserves were recorded at an increased E8.6 billion at the end of the past month.

It was a notable increase from the E8.1 billion recorded in July 2021. According to the Monthly Statistical Release from the Central Bank of Eswatini (CBE) covering the period July and August this year, they were mainly boosted by the country’s Special Drawing Rights (SDR) allocation from the International Monetary Fund (IMF) over the month under review.  This publication established that Eswatini’s allocation was 75.2. Online sources define SDRs as supplementary foreign exchange reserve assets defined and maintained by the IMF. SDRs are units of account for the IMF and not a currency per se. They represent a claim to currency held by IMF member countries for which they may be exchanged.

A general allocation of SDRs equivalent to about US$650 billion (about E9.3 trillion) became effective on August 23 this year. The allocation will benefit all members (including Eswatini) address the long-term global need for reserves, build confidence and foster the resilience and stability of the global economy. It will particularly help most vulnerable countries struggling to cope with the impact of the COVID-19 crisis. In line with the growth in reserves, the import cover, according to the CBE report, rose to 3.6 months from 3.4 registered in July.

Valued in SDR, the reserves accelerated by 6.8 per cent month-on-month and 16.6 per cent year-on-year to settle at SDR417.2 million at the end of the past month. Countries hold foreign-exchange reserves partly to protect themselves against external crises. One common rule is that reserves that can cover three months’ worth of imports are adequate. Meanwhile, according to the CBE report, credit extended to the private sector grew by 0.3 per cent month-on-month and 8.6 year-on-year to reach E16 billion at the end of July this year. Growth was registered in credit to other sectors and households and non-profit institutions serving households (NPISH).

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