PUBLIC REAPING BENEFITS FROM GOVT’S UTILITY PRICES INCREASE FREEZE
Prime Minister Ambrose Mandvulo Dlamini

PUBLIC REAPING BENEFITS FROM GOVT’S UTILITY PRICES INCREASE FREEZE

It was a firm but popular decision and the public is beginning to reap benefits from it. This refers to the bold stance that was taken by the new government led by Prime Minister Ambrose Mandvulo Dlamini to freeze increases in utility prices in the last quarter of the previous years. Due to this pronouncement, the country recorded a historically low inflation of 1.8 per cent in April, as housing and utilities inflation decreased from 13.9 per cent in March 2019 to 0.9 per cent in April. This was disclosed during the recent meeting of the Monetary Policy Consultative Committee (MPCC) when it met with the Central Bank of Eswatini (CBE) later last month to consider
the appropriate monetary policy stance for the upcoming two months. Due to the low inflation rate, the CBE maintained interest rate at 6.75 per cent for the upcoming two months. This means that banks will continue charging
the same interest rate on loans as the last two months. In the May Monetary Policy Statement, CBE Governor Majozi Sithole said the bank welcomes the historically low inflation of 1.8 per cent recorded in April 2019 coming down
from 5.3 per cent in March 2019. “In line with the fall in inflation for April, the Bank’s quarterly inflation is forecasted to average 1.92 per cent in the second quarter (from 5.18 per cent forecasted in March),” he said.
However, he said due to the upside risks to inflation in the medium term arising from the likely implementation of a 15 per cent VAT on electricity, E1.20 per litre increase of the fuel levy, depreciation of the currency and an
increase in oil prices in the third quarter of 2019, inflation is projected to increase to an average of 5.15 per cent. “Inflation is expected to average 4.37 per cent in 2019, down from 4.81 per cent observed in 2018,” he said.
On the other hand, the governor said credit extended to the private sector grew by 1.0 per cent month-on-month to reach E15 billion in March 2019. “The turnaround was due to an increase in the demand for credit by other sectors and businesses whilst households depicted a lower appetite for credit over the review month.” Compared year-on-year, he said private sector credit reflected an increase of 8.0 per cent. Credit extended to the business sector
increased by 1.3 per cent to reach E6.8 billion in March from a 2.1 per cent decline observed in the previous month. Compared to March 2018, credit to the business sector was 15.6 per cent higher. The country’s stock of reserves was reported at E5.1 billion as at 17 May 2019. The reserves were enough to cover an estimated 2.2 months
of imports of goods and services. “The bank will continue to monitor developments that will influence the movements of inflation and reassures the public that it will act appropriately if there are significant changes to the inflation outlook. The bank further reassures the public that the bank’s monetary policy stance remains supportive to economic growth,” said Sithole.

Leave a Reply

Close Menu
×