MSF to host own ‘national dialogue’
MBABANE – The country’s Gross Official Reserves currently stand at E7.4 billion and only enough to cover imports over 2.7 months.
This is below the recommended benchmark of three months import cover and such a scenario has left the Central Bank of Eswatini (CBE) greatly disturbed.
Yesterday, the CBE released its Monetary Policy Statement in which it reported that the reserves were at E7.4 billion as at September 16, 2022 and that this was below the levels observed for September 2021 where the reserves were at E8.6 billion – equivalent to 3.4 import cover.
“The bank is highly concerned by the observed deterioration on the country’s reserves position,” CBE Governor Phil Mnisi said in the statement, and further stated: “At this level, the reserves are lower than the recommended benchmark of three months import cover.”
This is the lowest that the country’s reserves have gotten since the year 2022 began and this is the only time this year that they have fallen below the three months benchmark.
The latest figures show that the reserves have dwindled by as much as E2.6 billion over the past two months.
This is when taking into account that as of July 15, 2022, the reserves were at E10 billion and enough to cover 3.7 months of imports.
Before the latest figures were released, the lowest the reserves had been this year was at March 18 when they were at E8.1 billion, which was enough to cover 3.1 months of imports.
When the year began, the reserves, as at January 29, were at E9.6 billion, equivalent to an estimated 3.8 months of imports cover.
The lowest that the country’s reserves have reached was in 2012 when they were enough to cover only 1.9 months of imports.
This was the culmination of a financial
MCOVER
BABANE – The Multi-Stakeholder Forum (MSF) has decided to hold its own national dialogue.
The decision was communicated by the Chairman of the organisation Thulani Maseko after a meeting held by stakeholders in South Africa two weeks ago.
Maseko said all the organisations under MSF agreed that the participation of the Mass Democratic Movement (MDM) in the fight for democracy should focus on community dialogues throughout the country. He said they agreed to start engaging with the people in readiness of the political dialogue
He said their aim was not to focus on election as they took a decision to boycott it. He stated that they were invested on the issue of a national dialogue and they wanted it to happen before the election. He said the community dialogues were a build up to a bigger national dialogue they would host on September 30, 2022. He explained that the details of how the dialogues would be carried out were yet to be released.
ELABORATED
He elaborated that their position was that they were not going to entertain anything that would promote the current system of governance. Maseko stated that the national dialogue was not just for the political parties or about government but its was about the people.
“Unless the oppressed through mass formations acquire a critical consciousness of their condition and direct their principled united struggle at the struccrisis that began in 2008 when revenue received from the Southern African Customs Union (SACU) plummeted.
Before the reserves hit this historic low, there was panic earlier in 2011 when the reserves were equivalent to 2.5 months of imports cover and statements began doing the rounds that the local currency (Lilangeni) would be de-linked from the South African Rand.
This prompted the then CBE Governor, Martin Dlamini, to call a press conference to say there were many reasons why that would not be possible for now, citing the fact that Eswatini was part of the Common Monetary Area agreement (CMA) as one of the reasons.
The CMA allows for the free flow of money between the two countries at equal value.
AGREEMENT
According to the agreement, if a country petitions to withdraw, the agreement is in effect for 12 more months.
The then governor maintained that there was no threat of the country being de-linked because the Rand held by the country was adequate to meet the country’s liabilities.
The following year in 2012, the International Monetary Fund (IMF) withdrew its advisory team from Eswatini after failing to agree on the kingdom’s proposed financial reform programme.
The IMF was assisting the government in implementing the Fiscal Adjustment Roadmap (FAR), to right-size the budget, where government spending exceeded its revenue.
Of fundamental disagreement was the implementation of 10 per cent salary cuts on public sector employees, including tures of their oppression in order to build a transformed society in unity, there will always be space for the dominant class to make in roads, divide, co-opt and drive oppressed and constrained forms of participation that mesmerise, give false hope and mislead the masses manipulating their pain and hope. Our principle position means that we do not entertain the touted Tinkhundla elections, instead focus on our programme of action to ensure that whatever elections that are to be conducted are a product of an all-inclusive national political dialogue. We are mindful that at the end of the day the national dialogue is neither in the interest of the incumbent Tinkhundla System of Government nor about the pro-democracy movement. In essence it is about the people of Eswatini,” he said.
GENUINELY
Maseko said the people must genuinely be involved in the process and not used as pawns to rubber stamp a process that was pre-designed to protect and entrench power and interests of a few.
“Our sector structures in the form of the women, youth and students, community leader and organisers, the church, business, the LGBTIW community, labour, political parties are all geared up for rolling community dialogues. We are mapping out these community dialogues and are working on a big one on or about September 31. Preparations and logistics are underway, and we will announce this pretty soon. We understand that different organisations may have different views on the elections. We are nevertheless together that our focus must politicians.
Parliamentarians voted to reverse their 10 per cent salary cuts, arguing that they were the only public sector employees who had taken the cut.
There were allegations that government was drawing down central bank reserves to bridge the gap and cover public sector salaries.
The CBE had committed to continue helping government to meet its financial obligations – including paying civil servants’ salaries.
The bank said bonds could be sold and a credit line could be extended to government.
However, it said this was not meant to encourage government to keep on digging into the country’s gross official reserves.
INTEREST RATE INCREASES TO 6%
Meanwhile, individuals and businesses that have loans with banks will have to pay more in servicing these debts after the CBE announced an increase in the interest rate.
“Taking into consideration relevant global, regional and domestic economic factors; as well as the price and financial stability mandate, the bank decided to increase the discount rate by 100 basis points (1 per cent) from five per cent to six per cent,” reads the statement issued by the governor.
As per the statement, this means that banks are expected to increase the prime lending rate on loans extended to individuals and businesses to 9.5 per cent until the next monetary policy meeting.
On the domestic front, economic activity, as measured by the Gross Domestic be on ensuring that elections that are to be conducted must be informed by our five point principle, one of which is the call for multiparty democratic elections. Anything less than that is a non-starter,” said Maseko.
EMPHASISED
He emphasised that they were not going to wait for His Majesty King Mswati III and government to announce the dialogue. He said the traditional activities proved that the climate was now conducive for the dialogue to be held and therefore MSF was going ahead with planning and preparations.
He added that they all agreed that it
Product (GDP) is forecasted to be subdued in 2022 at 1.2 per cent, and this is reportedly mainly due to base effects after recording 7.9 per cent growth in 2021.
The CBE said with regard to the South African economy, which is linked to Eswatini’s, it contracted by 0.7 per cent in the second quarter of 2022, from 1.9 per cent expansion in the first quarter.
“The South African Reserve Bank (SARB) revised down its forecast to 1.9 per cent for 2022 (from 2.0 per cent in the July forecast). The SARB left its inflation forecasts for 2022 unchanged at 6.5 per cent. In the medium term, the SARB expects a slowdown in inflationary pressures and inflation coming down to 5.3 per cent for 2023 (from 5.7 per cent),” the CBE said.
HEIGHTENED
The SARB Monetary Policy Committee reportedly increased the report rate by 75 basis points (0.75 per cent) from 5.5 per cent to 6.25 per cent in September 2022, citing heightened risks to inflation.
On the global front, the CBE said an IMF outlook released in July 2022 reflected stalling global economic growth with a forecast of 3.2 per cent for 2022 (from 3.6 per cent in April projections) and 2.9 per cent for 2023 (from 3.6 per cent).
“In the same vein, advanced economies are expected to grow by a lower 2.5 per cent (from 3.3 per cent) in 2022, while emerging markets and developing economies are expected to grow by 3.6 was time for the community dialogues to begin.
“We will continue with our programme on community dialogues. We will not allow the traditional ceremonies to derail our plans. Anything that does not benefit the nation in terms of the dialogue will have to wait. We will do what we have to do to demand our freedom from the shackles system,” he added.
Maseko further noted the formation of other organisations similar to the MSF and said they were not worried but were focusing on achieving their goals. He said they were committed to the freedom of the people and were not going to engage on petty fights or try to justify their organisation.
PROTECTION
“We stand for the protection and promotion of all human rights and at the heart of democratic practices are the rights to freedom of association and assembly as well as freedom of expression, which are at the very heart of democracy. We note the formation of another organisation. The MSF took a position that it will not allow double membership. Leaders of organisations will or have made the conscientious decision to join either. We are focused on why the MSF was founded upon and what it seeks to achieve. We will not, and it is not for us to prescribe what and which independent organisations we must join up with. We are all expected to behave responsible in line with the decisions we make,” said Maseko.
Suspended founding member of the People’s United Democratic Movement (PUDEMO) Bonginkosi IB Dlamini founded a new political organisation with the same functions as the MSF. Some member organisations per cent in 2022 (from 3.8 per cent),” said the CBE.
The bank said risks to global growth included geopolitical tensions, rising inflation which could be harder to contain, and tighter global financial conditions, among others.
INFLATION NOW AT 5.8%
Headline inflation also increased to 5.8 per cent in August 2022 from 5.4 per cent in the previous month, showing that inflation remains on an upward trend.
The CBE has noted that the inflation has been increasing and likely to continue on this path over the short to medium term.
“Since the last meeting, inflation has risen by 2.2 percentage points, i.e., from 4.6 per cent to 5.8 per cent in August 2022,” the banks said.
According to the bank, inflationary pressures were coming mainly from elevated food and transport prices.
“The 2022 inflation forecast has been revised up to 4.8 per cent (from 4.4 per cent in the last meeting). For 2023, inflation is seen averaging at 5.3 per cent (from 4.5 per cent),” said the CBE.
The bank also reported that credit extended to the private sector grew by 0.2 per cent over the month to E16.7 billion at the end of July 2022.
Growth was also observed in credit to other sectors of the economy and households and non-profit institutions serving households (NPISH) while credit to businesses declined.
“Credit extended to NPISH increased by 1.2 per cent over the month to settle a E7.9 billion while credit extended to businesses reflected a 1.8 per cent contraction to settle at E7.9 billion at the end of July 2022,” the bank said.
Credit to other sectors of the economy reportedly improved by 11.2 per cent over the month to settle at E844.5 million at the end of July 2022.
Asset quality as measured by non-performing loans is said to have deteriorated slightly to reach 6.7 per cent (from 6.5 per cent prior).
“The bank sees this as not alarming given that most businesses are still recovering from the effects of COVID-19 and the Russia-Ukraine war,” said the bank. that were a part of the MSF joined the new organisation.
The new organisation is called the United Front for Democracy in Swaziland (The Front). In a prior interview, Dlamini said The Front was a platform for all emaSwati from different persuasions and different ideologies who were bound together by a common purpose of wanting to fight for a liberated Eswatini.
“That is why in The Front we are together, despite our different ideologies and different tactics since we come from different organisations with different tactics to employ in the fight for a common course, we have one common goal and that is the freedom of the people of this country. The other reason why The Front was formed was that we realised the need to open up the political landscape because in the past it was preserved for only political parties but we observed the need that we should also open it up so that it highlights issues faced by communities without the expectation that the people should be members of or be tied to a political party. That is why last week we had a programme where our approach was to call for the communities to highlight major issues that we need to attend to. We were trying to announce that we are available for everyone to bring their issues to us. Registration to The Front is also open to individuals and communities in general. The public is also encouraged to register any community issue that they think will need the attention of The Front,” he said.
Members of different political movements, parties and groups form part of the conglomerate.