Credit extended to the private sector amounted to E16.1 billion at the end of December 2021, representing an increase of 0.8 per cent month-on-month and 1.8 per cent year-on-year.
Central Bank of Eswatini CBE Governor Majozi Sithole in the monthly statistical release for December 2021- to January 2022 disclosed that growth in credit to the private sector was supported by credit to businesses, households and non-profit institutions serving households (NPISH). He explained that the improvement was on the back of a contraction in credit to other sectors of the domestic economy.
“Credit extended to businesses rose by 2.1 per cent from the previous review month and 3.4 per over the year to settle at E7.0 billion at the end of December 2021,” said Sithole.
The governor mentioned that the improvement was predominantly registered in credit to these subsectors; agriculture and forestry (mainly sugarcane), community, social, personal services and distribution together with tourism (mainly retail trade).
On the other hand, Sithole said a fall was mainly observed in credit to these subsectors; manufacturing (mainly soft drinks and other foods as well as meat processing) and mining, quarrying (mainly gold and other minerals).
It was reported that credit to other sectors recorded a decline of 3.2 per cent from November 2021 and 20.3 per cent over the year to settle at E1.5 billion at the end of December 2021.
This development was attributed to credit to local government and other financial corporations which declined by 9.2 per cent and 8.7 per cent, respectively.
“Partially offsetting the reduction, was growth in credit to parastatals, which improved by 12.2 per cent during the month under review,” Sithole explained.
Credit extended to households and NPISH closed the month under review at E7.6 billion, depicting an improvement of 0.4 per cent from the previous month and 6.1 per cent over the year.
Growth was supported by housing and motor vehicle finance, which grew by 1.0 per cent to E3.8 billion and 0.1 per cent to E904.9 million, respectively. Notwithstanding that December is a festive season month consumptive borrowing by households declined as other (unsecured) personal loans depicted a decline of 0.2 per cent month-on-month to settle at E2.9 billion at the end of December 2021.
Net claims on government with the banking sector stood at E2.5 billion at the end of December 2021, depicting an increase from E1.9 billion registered in November 2021.
The increase was on account of government borrowing from the Central Bank to fulfil budgetary obligations over the month under review.
Notably, claims on government rose by 8.2 per cent month-on-month to settle at E8.1 billion at the end of December 2021. Government deposits also increased albeit at a lower rate of 0.5 per cent from the previous month to reach E5.6 billion at the end of December 2021. Broad money supply (M2) grew by 4.9 per cent month-on-month and 0.3 per cent year-on-year to reach E21.3 billion at the end of December 2021, due to both components; narrow money (M1) supply and quasi money supply.
The growth in M2 was in line with improved private sector credit and higher expenditures related to the festive season during the month of December 2021. Narrow money supply (M1) amounted to E8.5 billion at the end of December 2021, higher by 8.8 per cent from November 2021 and 18.9 per cent over the year, driven by transferable (demand) deposits.
As a result, transferable (demand) deposits rose by 11.2 per cent month-on-month to close at E7.8 billion at the end of December 2021. Emalangeni outside depository corporations on the contrary fell by 11.1 per cent over the month under review to reach E768.5 million at the end of December 2021.
Quasi money supply reached E12.7 billion at the end of December 2021, increasing by 2.5 per cent month-on-month, however, compared to December 2020 fell by 9.3 per cent. The month-on-month growth was observed in both time and savings deposits, which grew by 2.6 per cent to E10.7 billion and 1.6 per cent to E2.0 billion, respectively.
Original story on New Observer