BY BANELE MAGONGO
MBABANE – The SACU Stabilisation Fund has grown by E280 million in three months, from E1 billion to E1.28 billion.
Today (Thursday, June 13, 2024) the Central Bank of Eswatini (CBE) Governor Dr Phil Mnisi mentioned that the SACU Stabilisation Fund now has an amount of E1.28 billion. This was when Dr Mnisi gave the Annual Monetary Policy Statement at the Royal Villas in Ezulwini.
This publication reported in February this year that the Stabilisation Fund had an amount of close to E1 billion. This was said by Minister of Finance Neal Rijkenberg in the House of Assembly when he delivered the Budget Speech for the 2024/25 financial year. At the time, Minister Rijkenberg stated that Government target having an amount of E1.5 billion in the fund.
Speaking at during the delivery of the Monetary Policy Statement, Dr Mnisi underscored the crucial role that collaboration between Government, relevant stakeholders, and the SACU Stabilization Fund could play in fostering a robust and resilient economy for the country.
The governor shared insights into the country’s progress in managing its external debt, indicating that Eswatini was making significant strides in honouring its commitments. Mnisi further disclosed that the bank was actively exploring the implementation of a digital currency, reflecting a proactive approach to embracing innovative financial technologies.
Mnisi affirmed that medium-term growth projections indicated a significant, broad-based economic expansion in Eswatini, with all sectors poised to contribute meaningfully to this progress. The governor emphasised that sustained growth was essential in achieving various socio-economic objectives, such as reducing unemployment, eradicating poverty, and increasing productivity. He maintained that the combined efforts of Government, private sector, and other socio-economic players would be instrumental in transforming Eswatini into an enviable, thriving economy.
Elaborating further, Dr Mnisi stated that private sector credit growth was expected to remain positive in the short to medium term, bolstered by the ongoing economic recovery in Eswatini, the region, and globally. However, the governor noted that potential economic uncertainties and unpredictable weather patterns could pose challenges to this trend, potentially undermining agricultural production and thus constraining credit growth.
Mnisi acknowledged a positive development in gross official reserves in 2023, attributable to SACU receipts received during the 2023/2024 fiscal year. In this context, the governor highlighted a key initiative jointly undertaken by the Government and the CBE: the establishment of the Revenue Stabilization Fund. In addition, the Central Bank is progressing with its research and development of a Central Bank Digital Currency (CBDC), known as the ‘Digital Lilangeni.’
SACU stands for Southern African Customs Union, a customs union among five countries in the Southern part of Africa. The countries are Eswatini, South Africa, Lesotho, Botswana, and Namibia. SACU is one of Eswatini’s major sources of income. However, this has been a disadvantage for the country, as this income is volatile, making it hard for the country to rely on it as a source of revenue.
This has made Government to establish a SACU Stabilisation Fund last year to address the volatility of the revenue from the customs union and to reduce the over-reliance on this revenue stream. The money in this fund will be used in the event it is deemed that the SACU revenue is low. In the event the SACU revenue is deemed high, the money in the fund will not be used.
