... WE ACCEPT, RESPECT IMF OPINION

EZULWINI – The Central Bank of Eswatini Governor, Dr Phil Mnisi, said indeed, they engaged with the IMF officials who expressed their opinion and as the bank, they respected that opinion.

He said however, it did not mean they would just wake up and attempt to close the aforementioned 75 basis points gap between Eswatini’s policy rate and that of the South African Reserve Bank (SARB). He said as the bank, they had their own fundamental which informed the country’s monetary policy. The governor acknowledged that because of the pegging of the Lilangeni to the Rand, ordinarily, one would expect the same interest rate, but that was not a given and it should be informed by macroeconomic fundamentals, which informed the policy decision. It is worth noting that the IMF further highlighted that buffers in the financial system were being rebuilt after the pandemic, but asset quality remained a concern.

Credibility

The International Monetery Fund (IMF) said banks were allocating their liquidity carefully, wary of rising NPLs and diminished credibility of the government and maintained a large excess reserve position at the CBE in the remunerated overnight call window. “Orderly workouts can alleviate stress and reduce risks,” said the IMF. The IMF Mission Chief for Eswatini, Jaroslaw Wieczorek, further highlighted that His Majesty the King recognised high poverty and unemployment as a national emergency and job creation was a focus of the FY24/25 budget.

Wieczorek said unemployment, which was 35.4 per cent in 2023 and 48.7 per cent among the youth, reflects a dearth of employment opportunities, as well as large skill gaps and mismatches. He said the current initiatives to address this issue have yet to yield significant results. He said policies to support private sector development should aim to attract foreign direct investment to address bottlenecks in the power sector and green financing to address climate change vulnerabilities. He said long-term growth needs the support of entrepreneurship, business facilitation and education policies. The IMF official added that efforts to strengthen governance were well noted. He said the Anti-Corruption Commission appeared to have gained vigor and progress has been made on the AML/CFT front, with the recently completed National Risk Assessment.

Investment

He said however, more needs to be done to address key shortcomings, resource constraints, and alter negative perceptions, which is essential for strengthening the business climate and attracting much-needed foreign direct investment. Wieczorek added that increasing the resources available to data producing offices, such as the Central Statistics Office, Treasury and Ministry of Labor and Social Security, was key. He said digitalisation can also help improve data collection. The IMF official also highlighted that government’s aim to boost growth and tackle social issues requires implementation of deep structural reforms, notably to strengthen the efficiency of public investment and increase support for entrepreneurship, while improving governance and revamping education policy to address skills mismatches and tackle structural unemployment.

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