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RESERVES SHOW UNEXPECTED E3.6 BILLION IMPROVEMENT

By NOMFANELO MAZIYA | 2024-07-28

The Central Bank of Eswatini (CBE) has announced a surprising E3.6 billion increase in the country’s gross official reserves which had fallen below the E10 billion mark and struggled to maintain import cover above three months.

According to Dr. Phil Mnisi delivering his monetary policy statement on Friday, ‘as at 12 July, gross official reserves stood at E11.6 billion equivalent to an import cover of 3.2 months’.

Earlier reports were published in the bank’s recent economic developments for May and June reported that preliminary data indicates that gross official reserves declined by 15.4 per cent month-on-month to reach E8 billion at the end of June.

import
“In line with the fall in reserves, the import cover decreased from 2.6 months in May to 2.2 months at the end of June ,” read the report.

It also notes that Eswatini’s net foreign assets stood at E8.9 billion at the end of May 2024, reflecting a month-on-month decrease of 11.9 per cent and year-on-year growth of 9.2 per cent.
“Accounting for the month-on-month decrease were both net foreign assets of other depository corporations and those of the official sector,” it stated.

It also noted that net foreign assets of other depository corporations declined by 25.9 per cent when compared to the previous month but grew by 9.7 per cent on a yearly basis to close at E2.4 billion at the end of May .

It indicated that the contraction experienced on a monthly basis was on account of the banks’ investments held in the Common Monetary Area combined with an increase in obligations to non-resident banks. “Net foreign holdings of the official sector closed at E6.5 billion at the end of May, representing a fall of 5.3 per cent month-on-month and growth of 9.0 per cent year-on-year,” reported CBE.

It also noted that the month-on-month fall was largely attributed by net Rand outflows from trades with commercial banks as well as government’s fiscal commitments.

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