Cost of owning motor vehicle increases
MBABANE – The cost of purchasing motor vehicles has escalated once again.
For an average import vehicle, an entrepreneur will now have to pay more, due to the increase in repo rate.
This means if E60 000 was spent to purchase an import sedan, E3 000 has now been added.
This goes to bank loans as well, if the said vehicle was purchased on loan at a repayment rate of E1 800 per month, that monthly instalment has escalated to at least E2 100.
The above estimates were provided by vehicle insurance experts from one of the local banks who advised that figures may differ depending on car dealership and insurance broker.
This comes after the Central Bank of Eswatini (CBE) raised the discount rate by 50 basis points, from 6.75 per cent to 7.25 per cent. Banks are also expected to increase the prime lending rate for loans extended to businesses and individuals to 10.75 per cent.
Headline inflation increased to 5.7 per cent in February from 5.3 per cent in the previous month. The CBE
Economist Sanele Sibiya also noted that with the continuous hikes, vigorous negotiation circles will soon commence with discussion on adjustments to remuneration packages for employees. He said the recent hikes have increased mortgages and loan repayments for employees; hence, an adjustment is needed.
“If we were to estimate, those with E1.2 million in bonds should expect an increase of about E5 000,” he said. Sibiya mentioned that Eswatini is currently on a normalisation drive-a period where the economy is trying to go back to pre-COVID-19 levels. Sibiya added that in the short term, household consumption will decrease exponentially. He further stated that the unemployed will be pushed below
Cost INCREASE IN INSTALMENTS
the poverty line. Sibiya said there was a need for the government to ease the pressure by increasing zero-vetted commodities. CBE Governor Dr. Phil Mnisi said they held a meeting with the Monetary Policy Consultative Committee (MPCC) to consider the appropriate monetary policy stance.
Developments
expects the cost of goods and services to increase moderately this year, as they have also revised their inflation forecast by 10 basis points to 5.6 per cent. The electricity tariff hike of 10.14 per cent will be effective today; this means E100 will now get you at least 48 units, down from 53 units.
Prices of goods and services will continue to increase exponentially due to the above adjustments. Economists are of the view that people will now cut the number of items in their groceries, due to the escalating cost.
They are also of the view that business revenues will decrease exponentially due to the increase in discount rate, which they said leads to the decrease in money circulation and consumer confidence.
Mnisi said they then decided to increase the interest rate by 0.5 per cent after taking relevant global and economic developments into consideration. “We took into account economic development, as well as the price and financial stability mandates and the bank then decided to raise the discount rate by 25 basis points from 6.75 per cent to 7.25 per cent,” he said.
Mnisi also mentioned that the
geopolitical tensions continued to weigh on global growth prospects and that the tightening of global monetary policy in response to an elevated inflation outlook impeded economic growth. ‘‘The International Monetary Fund (IMF) notes that the downside risk to global growth has worsened compared to its April 2022 assessment, the level of growth will be clarified in the next assessment,’’ he said. The governor mentioned that global supply chain disruptions, rising energy and other commodity prices would continue to weigh heavily on the global economic outlook.
In the CBE monetary policy statement released yesterday, Mnisi said economic activity as measured by the quarterly Gross Domestic Product (GDP) grew by 3.8 per cent on a year-on-year and a revised growth of 6.9 per cent in the third quarter of 2022.
QUOTES
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