BY BUSINESS EDITOR
MBABANE– The Central Bank of Eswatini (CBE) Financial Stability report 2023 has revealed that 79 per cent of Emaswati’ are struggling to service their debts.
According to the data, household indebtedness stood at 79.05 percent in June 2023, up from 68.3 percent in June 2022.
According to the Financial Stability Report, household income was constrained throughout the review period, owing principally to difficult economic conditions during the ongoing recovery phase following the COVID-19 pandemic.
“High debt levels, debt servicing costs, and inflationary pressures continue to threaten household disposable income.” The Ukraine-Russia conflict, combined with rising interest rates, put significant strain on the family sector. As a result, the disposable income-to-GDP ratio fell from 26.1 percent in 2022 to 21.6 percent in June 2023, putting a strain on lower-income households, who have less financial assets and are more vulnerable to shocks like COVID-19.
The CBE Governor, Dr. Phil Mnisi defines Financial Stability as a “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 Financial Stability Report is published annually by the CBE and provides a platform to communicate with stakeholders about pertinent issues and assessments of identified risks and vulnerabilities in the financial system.
Worth noting, in November last year, The central bank of Eswatini (CBE) kept its benchmark interest rate unchanged, which means that banks are expected to maintain the prime lending rate on loans extended to businesses at 11.0 per cent and the interest rate at 7.5 per cent.
The outcome was consistent with analyst and economist forecasts, which had changed in the previous few weeks to reflect the belief that the cycle of rate hikes has peaked and that CBE would now likely decrease rates.
The bank has kept the interest rate at 7.5% in accordance with the Monetary Policy Consultative Committee (MPCC), according to CBE Governor Dr. Phil Mnisi. According to the governor, banks were therefore required to hold the prime lending rate on loans made to individuals and businesses at 11.0 percent until the next monetary policy meeting in order to keep interest rates stable.
According to Dr. Mnisi, the CBE anticipates a modest increase in the price of goods and services in 2023. He pointed out that the bank had lowered its inflation projection to 4.93 percent for 2023 and 4.68 percent for 2024.
He said that supply chain disruptions, unstable oil prices, and the potential for drier weather, which would have an impact on food production, remain the main threats to Eswatini’s inflation outlook. Mnisi stated that the prospects for global economy are still being negatively impacted by tighter monetary policy.
