MBABANE – Heightened global uncertainty and persistent geopolitical tensions have forced the Central Bank of Eswatini to maintain a cautious monetary policy stance, keeping its discount rate unchanged at 6.75 per cent despite improving domestic inflation dynamics.
Presenting the Monetary Policy Consultative Committee (MPCC) statement on Friday, Governor Phil Mnisi said the decision reflects a delicate balancing act between supporting domestic economic recovery and guarding against external risks that continue to cloud the global outlook.
The move mirrors developments in the region, particularly in South Africa, where the South African Reserve Bank (SARB) also opted to hold its repo rate steady at 6.75 per cent during its March 2026 meeting.
This synchronised stance between Eswatini and its largest trading partner underscores the extent to which global and regional dynamics are shaping domestic monetary policy decisions.
At the heart of the Central Bank’s decision is a global economy that continues to show signs of fragility, with growth slowing across major advanced economies and financial markets remaining sensitive to geopolitical developments.
Growth across key economies has moderated. In the United States, expansion slowed to 2.0 per cent in the fourth quarter of 2025, from 2.3 per cent previously, while the Euro Area recorded a slowdown to 1.2 per cent and the United Kingdom to 1.0 per cent.
Although inflation has eased in many of these economies, it remains uneven and, in some instances, above Central Bank targets. This has complicated the policy outlook, as authorities seek to avoid loosening too quickly and risking a resurgence in inflation.
Central Banks in advanced economies have therefore adopted a cautious stance, holding interest rates steady while assessing incoming data and global developments.
At the beginning of the year, markets had widely anticipated that 2026 would mark the start of a global monetary easing cycle. However, these expectations have been tempered by escalating geopolitical tensions that continue to disrupt global supply chains and trade flows.
*…
Financial sector remains stable
MBABANE – The domestic financial sector continues to demonstrate resilience, with key indicators pointing to improved stability and risk management.
Private sector credit stood at E22.1 billion at the end of January 2026, reflecting a slight month-on-month decline but maintaining a healthy year-on-year growth rate of 5.3 per cent.
The decline in credit on a monthly basis suggests some moderation in borrowing activity, possibly reflecting cautious sentiment among businesses and consumers. Encouragingly, the quality of banks’ loan books has improved significantly. Non-performing loans declined to E1.2 billion, with the NPL ratio falling to 6.0 per cent.
This improvement indicates stronger credit risk management and a more stable banking sector, which is crucial for sustaining economic growth.
While the domestic economy shows resilience, fiscal and external vulnerabilities remain areas of concern. Gross official reserves stood at E11.2 billion as of March 20, 2026, equivalent to 2.6 months of import cover.
Although this provides some buffer against external shocks, it remains below the three-month benchmark often considered adequate for small open economies. On the fiscal side, public debt continues to rise, reaching E38.8 billion in February 2026, equivalent to 40.4 per cent of GDP.
The steady increase in debt levels underscores the need for fiscal consolidation and prudent management of public finances. Rising debt, combined with external uncertainties, limits the scope for aggressive policy interventions and reinforces the importance of maintaining macroeconomic stability.
*Full article available on Pressreader*
Leave a comment