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FDI NET INFLOW HITS E896.1M IN 1ST QUARTER

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MBABANE – During the first quarter of the year foreign direct investment (FDI) showed a wider increase in FDI liabilities compared to the increase in the financial assets acquisitions. This resulted in a net inflow of E896.1 million in the period under review.

A net E305.8 million inflow was recorded in the third quarter. FDI assets increased by E190.6 million following a decline of E304.1 million in the third quarter. Driving the increase in assets acquired were direct investment loans amounting to E704.3 million that were granted to fellow enterprises.  FDI incurred liabilities to the value of E1.087 billion during the fourth quarter, largely dominated by inflows of loans from direct investors to direct investment enterprises in Eswatini.

Reinvestment

Loans from head offices abroad rose by E722.0 million with reinvested income increasing by E373.0 million from E1.093 billion in the third quarter. The reinvestment of earnings back into the economy signifies the confidence that foreign companies have in the country. The portfolio investment account registered a net E1.301 billion outflow in the country’s portfolio assets, a 10 per cent increase from the outflows in the third quarter. The main contributors to the increase are insurance and pension funds that show a E1.379 billion increase in investments placed abroad in the form of equity and investment funds shares. Deposittaking operations posted a E144.6 million decline in their foreign portfolio assets in the fourth quarter following an increase of E141.5 million in the previous period.  

Foreign

The ‘other investment’ account shows a net E1.658 billion contraction in assets acquired during the last quarter of 2023, resulting to a net inflow of funds into the country. ‘Other investment’ assets abroad shrunk by E1.792 billion, with E1.445 billion of these denominated as ‘currency and deposits’. Also contributing to the net result in ‘other investment’ foreign assets was a E347.5 million decline in ‘trade credit and advances’, a positive position for suppliers of goods and services in the country. ‘Other investment’ liabilities also declined by E134.3 million from an increase of E1.192 billion in the third quarter.

The outflow was buoyed by E481.3 million reduction in loan liabilities in the fourth quarter, with government foreign loan drawdowns shrinking by E249.9 million in the period under review.The country’s external reserve assets increased notably, in the last quarter of 2023, posting a surplus of E1.349 billion following a E640.3 million surplus in the third quarter. Of these, E1.232 billion assets were placed in ‘currency and deposits’ instruments, and E168.8 million outflows were recorded in external securities.

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