Times Of Swaziland: SACU RECEIPTS BOOST RESERVES

SACU RECEIPTS BOOST RESERVES
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BY ASHMOND NZIMA on 10/05/2021 07:59:00


MBABANE – The country’s gross official reserves were recorded at E9.5
billion at the end of the past month.
This reflected growth of 3.3 per cent from March 2021 and 16.9 per cent over the
year. According to the monthly statistical release from the Central Bank of
Eswatini, the month-on-month increase was as a result of the quarterly Southern
African Custom Union (SACU) receipts at the beginning of April 2021.
Reserves
In line with the increase in reserves, the import cover rose from 4.0 months
recorded in March to 4.1 at the end of the past month. Valued in special drawing
rights (SDR), the reserves amounted to SDR457.2 million at the end of April,
higher by 4.0 per cent relative to the previous month and 40.3 year-on-year. One
common rule is that reserves that can cover three months worth of imports are
adequate. Reserves are simply the foreign currencies held by a country’s
central bank. There are several reasons why banks hold reserves. The most
important reason is to manage their currencies’ values. The critical function
is to maintain liquidity in case of an economic crisis.
Extended
Meanwhile, credit extended to the private sector declined by 1.6 per cent
month-on-month but grew by 9.3 per cent over the year to settle at E15.3 billion
at the end of March 2021. The fall over the month was evident in credit to
businesses and other sectors of the domestic economy. However, credit to
households and non-profit institutions serving households (NPISH) increased
slightly. Credit extended to businesses, on the other hand, amounted to E6.1
billion at the end of March this year, representing a decline of 3.1 per cent
over the month and 1.8 per cent from the previous year.
Distribution
The month-on-month decline in credit to businesses was discernible in
distribution and tourism as well as agriculture and forestry sectors by 9.9 per
cent and 5.2 per cent, respectively. Against this backdrop, however, growth was
observed in the following subsectors: construction (8.4 per cent); mining and
quarrying (2.9 per cent); community, social and personal services (5.3 per
cent); transport and communication (1.8 per cent), real estate (1.0 per cent) as
well as manufacturing (0.2 per cent). Credit to other sectors reflected a
month-on-month fall of 2.7 per cent and growth of 54.2 per cent year-on-year to
reach E1.9 billion at the end of March 2021.