Home | Business | ESWATINI’S FINANCIAL STABILITY INDEX SURGES

ESWATINI’S FINANCIAL STABILITY INDEX SURGES

Font size: Decrease font Enlarge font

MBABANE - In June 2024, the Financial Stability Index reflected an upward trend, rising to 0.50 index points from 0.02 index points in June 2023.

According to the Central Bank of Eswatini (CBE) Governor Dr Phil Mnisi, this positive trajectory is underpinned by enhanced bank asset quality, robust private sector credit growth and increase in the value of gross official reserves. Further, the banking sector’s capital adequacy ratio remains strong, even as we navigate profitability challenges. Dr Mnisi said this during his the presentation of the 2024 Financial Stability Review (FSR) yesterday. The governor said the FSR is not just an assessment of the country’s financial system’s health; it is a vital tool for transparency, accountability and forward-looking policymaking.
He said through this review, they aim to:

  • Identify potential risks and vulnerabilities within our financial system
  • Monitor trends and developments in banking, non-banking financial institutions, households and corporates
  • Enhance public and stakeholder confidence by demonstrating the resilience of our financial infrastructure.

“In essence, the FSR underscores our unwavering commitment to safeguarding financial stability, which we define as the condition in which the financial system-comprising of financial intermediaries, markets and market infrastructures is capable of withstanding internal and external shocks such that participants have confidence in the system”, the governor commented.
He said this definition is rooted in their commitment to fostering resilience, adaptability and inclusivity across all economic sectors.

He said a key highlight of the FSR is the Aggregate Financial Stability Index (AFSI). By definition, the AFSI is a composite indicator that combines multiple economic and financial variables to assess the overall health and stability of the financial system. It acts as an early warning system, identifying potential risks and vulnerabilities that could trigger financial instability or crises. The governor indicated that in the household sector, declining indebtedness and rising disposable income signal reduced financial stress.

He stated that when households reduce their debt levels and their disposable income rises, they experience less financial pressure, which is a positive indicator of economic well-being, which, in turn, contributes to broader financial stability by reducing the risks of defaults and financial disruptions in the household sector. One notable development is the decrease in household indebtedness, which fell to 74.3 per cent in June 2024, from 79.1 per cent in the previous year. This reduction is largely attributed to increased disposable income and an overall improvement in financial conditions.

The debt-service ratio, which tracks the proportion of income devoted to servicing debt, also saw a slight improvement, closing at 54.8 per cent from 55.1 per cent in June 2023.
The governor stated that while the household sector shows signs of relief, unsecured lending remains a concern.  He said a significant portion of household debt continues to be in the form of unsecured loans, which remain vulnerable to interest rate fluctuations and changes in disposable income. Despite a slight improvement in non-performing loans for unsecured credit, ongoing monitoring is necessary to ensure that these loans do not pose a greater risk to financial stability, particularly if interest rates rise or economic conditions worsen.

Comments (0 posted):

Post your comment comment

Please enter the code you see in the image:

avatar https://zencortex.colibrim.ca I was suggested this website by my cousin. I'm not sure whether this post is written by him as no one else know such detailed about my trouble. You're wonderful! Thanks! https://zencortex.colibrim.ca on 16/10/2024 11:47:32
avatar https://fitspresso.colibrim.ca Hi there to every one, since I am truly eager of reading this website's post to be updated daily. It consists of nice data. https://fitspresso.colibrim.ca on 16/10/2024 05:03:21
avatar https://zencortex.colibrim.ca I am really impressed with your writing skills as well as with the layout on your weblog. Is this a paid theme or did you modify it yourself? Anyway keep up the nice quality writing, it's rare to see a great blog like on 16/10/2024 02:57:17
: PRAYER
Should pastors charge fees for prayers?