MORE IMPORTS THAN EXPORTS IN SEPTEMBER?

MBABANE – Were there more imports than exports in the country in September?
This is question follows that the country’s reserves declined by 18.9 per cent when compared year-on-year and were reported to be enough to cover an estimated 2.3 months of imports of goods and services.

Foreign exchange reserves are the foreign currencies held by a country’s central bank.
They are also called foreign currency reserves or foreign reserves. There are seven reasons why banks hold reserves.
The most important reason is to manage their currencies’ values.

Supplies

The central bank supplies foreign currency to keep markets steady. It also buys the local currency to support its value and prevent inflation. This reassures foreign investors, who return to the economy.
This is a decline from 2.8 months recorded in August 2019. This is  according to the Central Bank of Eswatini (CBE) monthly statistical release for the months of August/September 2019.

Also, the CBE reported that on the valued in special drawing rights (SDRs), the reserves declined by 18.0 per cent month-on-month to settle at SDR253.3 million.

Annually, the SDR value of reserves fell by 22.1 per cent.
Meanwhile, the CBE also reported that the credit extended to the private sector settled at E14.9 billion at the end of August 2019 from E15.0 billion the previous month, reflecting a 0.5 per cent contraction.

Responsible for the fall, according to the CBE, was credit extended to other sectors and businesses. However, the bank reported that the decline was partly offset by growth in credit extended to households and non-profit institutions serving households (NPISH).
On an annual basis, Private Sector Credit improved by 4.1 per cent.

“Credit Extended to Other Sectors stood at E1.4 billion at the end of August 2019 from E1.6 billion the previous month, showing a 10.0 per cent month-on-month decline. Contributing to the fall was all its components; credit to Public Non-Financial Corporations fell by 14.3 per cent followed by credit to Other Financial Corporations with a fall of 8.0 per cent and credit to Local Government with a decline of 1.9 per cent,” reads in part the report.

“On the other hand, motor vehicle loans decreased by 0.03 per cent to close at E998.5 million at the end of August 2019,” reads the report in part.

Reported

The bank further reported that the net claims on government by the banking sector grew by 18.8 per cent to reach at E2.6 billion in August 2019 from E2.2 billion the previous month.

This development, according to the CBE, was due to a higher increase in claims on government (14.5 per cent) compared to government deposits (10.2 per cent) over the review month.

The bank reported that the year-on-year, net claims on government increased by 35.8 per cent while broad money supply (M2) stood at E17.9 billion at the end of August 2019, showing an expansion of 4.3 per cent from E17.2 billion in July 2019.

The rise in M2, according to the bank, emanated from both narrow money supply and quasi money supply.
On an annual basis, the bank reported thatM2, contracted by 4.3 per cent.

Narrow Money Supply (M1) increased by 7.3 per cent from E5.8 billion in July 2019 to E6.2 billion at the end of August 2019.
This development was due to growth in both Emalangeni Outside Depository Corporations and Transferable (Demand) Deposits.

Grew

Emalangeni Outside Depository Corporations grew by 12.3 per cent to close at E745.4 million. Transferable (Demand) Deposits went up by 6.7 per cent to reach E5.5 billion.

Quasi Money Supply amounted to E11.7 billion at the end of August 2019, up by 2.7 per cent from E11.4 billion in July 2019. Owing to this development was a 3.3 per cent rise in Time Deposits to E9.7 billion. Savings Deposits, on the other hand, declined by 0.1 per cent to close at E1.9 billion.

The Overall Liquidity Position of the Banking Industry settled at E5.8 billion at the end of August 2019, reflecting a month-on-month growth of 10.4 per cent from E5.3 billion the preceding month. Consequently, the Liquidity ratio rose from 33.6 per cent in July 2019 to 35.8 per cent in August 2019. Annually, the Liquidity Position of the Banking Industry grew by 16.7 per cent.

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