CENTRAL BANK OF SWAZILAND

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1 CENTRAL BANK OF SWAZILAND EMNTSHOLI S W A ZIL A D N QUARTERLY REVIEW MARCH 2017 a

2 b

3 CENTRAL BANK OF SWAZILAND QUARTERLY REVIEW MARCH 2017 The Quarterly Review is prepared by the Research Department of the Central Bank of Swaziland Enquiries concerning the Review should be addressed to:- GM, Economic Policy, Research and Statistics Central Bank of Swaziland P.O. Box 546 MBABANE, Swaziland Tel: General Notes The following symbols and conventions are used throughout this review. n.a.: not available -: nil or less than half of the final digit shown Users should also note that: Owing to the rounding of figures, the sum of separate items will sometimes differ in the final digit from the total shown; and data in the tables are subject to revision from time to time as more current information becomes available. 1

4 TABLE OF CONTENTS 1. OVERVIEW OF GLOBAL ECONOMIC DEVELOPMENTS RECENT ECONOMIC DEVELOPMENTS FOR SELECTED ECONOMIES ECONOMIC DEVELOPMENTS IN SOUTH AFRICA DOMESTIC ECONOMIC DEVELOPMENTS 4.1 GENERAL OVERVIEW Headline Inflation Exchange Rate/Real Effective Exchange Rate MONETARY SECTOR Net Foreign Assets Gross Official Reserves Credit Extension Money Supply Domestic Liquid Assets Interest Rates MONEY AND CAPITAL MARKETS Swaziland Government Treasury Bills Swaziland Government Bonds Bond Issuances Coupon Payments PUBLIC EXTERNAL DEBT Debt Stock Disbursements Debt Service New Loans/Loan Maturity BALANCE OF PAYMENTS Changes in the Balance of Payments and International Investment Position Methodology due to Migration from BPM5 to BPM Overview Current Account Trade Account Services Account Primary Income Secondary Income Financial Account STATEMENT OF MONETARY POLICY CONSULTATIVE COMMITTEE Monetary Policy Statement - January Monetary Policy Statement - March

5 LIST OF FIGURES Figure 1: Gold and Oil Prices (US Dollars) Figure 2: South Africa GDP Growth Figure 3: South Africa PPI and CPI Figure 4: Inflation Trends Figure 5: Monthly Lilangeni s NEER/REER Indices Figure 6: Cross Atlantic Currency Rates Figure 7: Basket Currency Rates Figure 8: Net Foreign Assets Figure 9: Gross Official Reserves & Import Cover Figure 10: Private Sector Credit Figure 11: Private Sector Credit Composition Figure 12: Net Government Balances with Banking Sector Figure 13: Money Supply Figure 14: Domestic Liquid Assets and Liquidity Ratio Figure 15: Monetary Base, Deposits and Loans Figure 16: Interest Rates Figure 17: Treasury Bills and The Average Discount Rate Figure 18: Treasury Bills & Bonds Figure 19: Current Account Figure 20: Financial Account LIST OF TABLES Table 1: Major Economic Indicators... 6 Table 2: Swaziland Comparative Interest Rates Table 3: Savings Deposits Rates for Banks Table 4: Holdings of Swaziland Government Treasury Bills Table 5: Holdings of Swaziland Government Bonds Table 6: Swaziland Government Bonds Listed on Swaziland Stock Exchange Table 7: First Quarter Coupon Payments Table 8: Private Placements Table 9: Standard Critical Value of Debt Ratios

6 STATISTICAL TABLES Central Bank S 1.1 Central Bank of Swaziland, Assets S 1.2 Central Bank of Swaziland, Liabilities S 1.3 Denominations of Swaziland Currency Issued by the Central Bank of Swaziland Money S 2.1 Depository Corporations Survey S Central Bank of Swaziland Survey S Other Depository Corporations Survey S Depository Corporations Survey S 2.2 Other Depository Corporations and Monetary Ratios S 2.3 Money Supply Commercial Banks S 3.1 Bank Liquidity Requirements S 3.2 Bank Reserve Requirements S 3.3 Bank Liquidity Position S 3.4 Reserve Requirement Position of the Banks S 3.5 Assets of Other Depository Corporations (Banks and Building Society) S 3.6 Liabilities of Other Depository Corporations (Banks and Building Society) S 3.7 Total Other Depository Corporations Loans and Advances by Category of Borrowers S 3.8 Total Bank Loans and Advances by Type of Industry (Other Non-Financial Corporations) S 3.9 Ownership of Other Depository Corporations Deposits (Deposits in Foreign Currency Included) S 3.9 Ownership of Other Depository Corporations Deposits (Deposits in Foreign Currency Included) (cont d) S 3.10 Classification of Selected Other Depository Corporations Deposits Money Market S 4.1 Interest Rates Paid on Deposits in Swaziland (%) S 4.2 Comparative Interest Rates: Swaziland and South Africa Government Debt S 5.1 Outstanding Issues of Swaziland Government Stocks and Stocks Guaranteed by Government S 5.2 Ownership of Swaziland Government Stocks and Bills S 5.3 Maturity Distribution of Swaziland Government Securities S 5.4 Government of Swaziland Treasury Bills

7 Budget S 6.1 Summary of Central Government Operations S 6.2 Swaziland Government Current Revenue Balance of Payments S 7.1 Swaziland s Summary Balance of Payments S 7.2 International Investment Position (IIP) S 7.3 Balance of Payment - Financial Account S 7.4 Export of Goods by Commodity Section S 7.5 Import of Goods by Commodity Section S 7.6 Total Public External Debt Stock S 7.7 Swaziland s Official Reserves S 7.8 Swaziland s Foreign Assets S 7.9 Selected Foreign Exchange Rates Prices S 8.1 CMA Comparative Price Indices S 8.2 Swaziland Consumer Inflation Real Economy S 9.1 Mineral Production S 9.2 Electricity Consumption S 9.3 Treated Water Consumption S 9.4 Construction

8 TABLE 1: MAJOR ECONOMIC INDICATORS; REAL SECTOR # Nominal GDP E' Million/1 25, , , , , , , Real GDP (factor cost) - E' Million/1 13, , , , , , , Real growth rate/ (0.63) GDP/Capita/1 24, , , , , , , Agric./GDP (%) - market price/ Manuf./GDP (%) - markey price/ Govt./GDP (%) - market price/ Population ('000)/1 1, , , , , , , Average inflation BALANCE OF PAYMENTS - (E' Million)*** Merchandise exports 13, , , , , , , Merchandise imports (14,314.62) (14,157.14) (15,174.23) (16,343.80) 18, , , Trade balance (1,097.19) (319.21) , , , , Net services (3,161.95) (4,128.33) (4,798.58) (4,857.30) (3,540.91) (2,480.83) (3,058.72) Primary income (1,655.67) (1,856.55) (2,576.11) (3,486.10) (326.12) Secondary Income 2, , , , , , , Current account (2,946.61) (2,458.65) 1, , , , , Direct investment (net) (590.06) (1,084.11) (298.66) Portfolio investment (net) (753.27) (107.82) (137.60) 2, (291.86) Other investment (net) (656.46) (1,335.34) (149.20) 9, , , Overall balance (1,692.82) (689.99) 1, , (76.05) (597.16) Exchange rate* (E/US Dollar) MONEY AND BANKING Narrow money growth (%) (3.50) Quasi money growth (%) 6.42 (1.37) Broad money growth (%) Domestic credit (net) - E' Million 4, , , , , , , Government (2,031.20) (618.89) (1,589.80) (3,008.44) (2,965.02) (2,737.66) (833.65) Private sector 6, , , , , , , Interest rates (% p.a) Prime lending Discount rate Deposit rate - 31 days months T. bill rate Ratios Liquidity ratio (required = 20%) Loans/deposits ratio Net foreign assets (E) 5, , , , , , , Gross official foreign reserves (end of period) (E) 4, , , , , , , In months of imports of goods and services PUBLIC FINANCE [E'Million] Total revenue and grants 6, , , , , , , Total expenditure and net lending (10,338.30) (9,132.33) (10,567.40) (12,889.82) (15,304.43) (16,998.65) (21,193.88) Overall surplus/deficit (3,507.67) (1,948.18) 1, (573.31) (2,546.33) (6,842.35) As a % of GDP (10.60) (5.40) (1.20) (4.80) (12.30) External financing (net) (118.76) (135.94) (146,043.00) 38, (1,208.95) Domestic financing (net) 3, , (1,321,254.00) (255,006.00) , , Total external debt** [E' million] 2, , , , , , , As a % of GDP As a % of exports of goods and services Debt service (E' million) As a % of GDP As a % of exports of goods and services Source: Central Bank, Ministry of Finance and Economic Planning & Development Note: N/A = Not available * Exchange rate quoted at average period as at December /1 Revised # GDP figures are based on CSO provisional data and rebased to the new base year **Total external debt stock excludes private sector debt from *** are now in the new BPM6 format and still subject to further revisions. 6

9 1. OVERVIEW OF GLOBAL ECONOMIC DEVELOPMENTS 1 According to the International Monetary Fund s April 2017 World Economic Outlook (WEO) global, economic activity is picking up with a long-awaited cyclical recovery in investment, manufacturing, and trade. World growth is expected to rise from 3.1 per cent in 2016 to 3.5 per cent in 2017 and 3.6 per cent in 2018, slightly above the October 2016 forecast. Global growth is forecast to increase marginally beyond 2018, reaching 3.8 per cent by This pickup in global activity comes entirely from developments in emerging market and developing economies, where growth is projected to increase to 5 per cent by the end of the forecast period. These economies impact on global activity is further boosted by their rising contribution to the global economy. Stronger activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply, have helped commodity prices recover from their troughs in early Higher commodity prices have provided some relief to commodity exporters and helped lift global headline inflation and reduce deflationary pressures. Financial markets are buoyant and expect continued policy support in China and fiscal expansion and deregulation in the United States would continue to support growth. Further, if confidence and market sentiment remain strong, short-term growth could indeed surprise on the upside. Economic activity gained some momentum in the second half of 2016, especially in advanced economies. There has been continued cyclical recovery in advanced economies with growth expected to increase by 2.0 per cent in 2017 from 1.7 per cent in In 2018, growth is 1 International Monetary Fund, World Economic Outlook, April forecast remain stable at 2.0 per cent. Growth picked up in the United States (US) in 2016 as firms grew more confident about future demand, and inventories started contributing positively to growth (after five quarters of drag). Growth also remained solid in the United Kingdom (UK), where spending proved resilient in the aftermath of the June 2016 referendum in favour of leaving the European Union (Brexit). Activity surprised on the upside in Japan thanks to strong net exports, as well as in euro area countries, such as Germany and Spain, as a result of strong domestic demand. Economic performance across emerging market and developing economies has remained mixed. Whereas China s growth remained strong, reflecting continued policy support, activity has slowed in India because of the impact of the currency exchange initiative, as well as in Brazil, which has been mired in a deep recession. Activity remained weak in fuel and non-fuel commodity exporters more generally, while geopolitical factors held back growth in parts of the Middle East and Turkey (IMF World Economic Outlook, April 2017). 2. RECENT ECONOMIC DEVELOPMENTS FOR SELECTED ECONOMIES The United States: The US economy grew by an annualized 0.7 per cent quarter-on-quarter in the first quarter of 2017, below expectations of 1.1 per cent growth, a preliminary estimate showed. The deceleration in real GDP was mostly a result of weak auto sales and lower home-heating bills which offset a pickup in investment in housing and oil drilling (US Bureau of Economic Analysis, April 2017). The US economy is projected to expand at a faster pace in 2017 and 2018, with growth forecast at 2.3 per cent and 2.5 per cent, respectively. The stronger near-term outlook reflects the momentum from the second half of 2016, driven by a cyclical recovery in inventory accumulation, solid consumption growth, and the assumption of a looser fiscal policy stance. The anticipated shift in the policy mix so far has buoyed financial markets and strengthened business confidence, which could further fuel the current momentum (IMF WEO, April 2017). 7

10 The US Federal Reserve raised the target range for its federal funds by 25 basis points to between a range of 0.75 per cent to 1 per cent during its March 2017 meeting. The decision came in line with market expectations as the labour market strengthened and economic activity continued to expand at a moderate pace, policymakers said. Interest rate forecasts point to another two rate hikes this year, the same as in the December projection. According to the Federal Reserve Bank, the economy is expected to grow by 2.1 per cent in 2017 (2.1 per cent in the December projection), 2.1 per cent in 2018 (2 per cent in the December projection) and 1.9 per cent in 2019 (1.9 per cent in the December projection) (Federal Reserve, April 2017). Consumer prices in the US increased by 2.4 per cent year-on-year in March 2017, lower than 2.7 per cent rise in February and below market expectations of 2.6 per cent. This was the lowest inflation rate in three months due to a slowdown in energy and services costs. On a monthly basis, consumer prices went down by 0.3 per cent, the first drop in 13 months (US Bureau of Labour Statistics, April 2017). US unemployment rate fell to 4.5 per cent in March 2017 from 4.7 per cent in the previous month, better than market expectations of 4.7 per cent. It was the lowest unemployment rate since May 2007, as the number of unemployed persons declined by 326,000 to 7.2 million while the labour force participation rate was unchanged at an 11-month high of 63 per cent (US Bureau of Labour Statistics, April 2017). In the Eurozone: The Eurozone economy advanced by 0.4 per cent quarter-on-quarter in the three months to December 2016, the same as in the previous period and in line with the second estimate. Household consumption and fixed investment were the main drivers of growth while net external demand contributed negatively. In 2016, GDP advanced by 1.7 per cent after growing by 2 per cent in 2015 (Eurostat, April 2017). GDP in the Eurozone is expected to grow by 1.7 per cent in 2017 and 1.6 per cent in The medium-term outlook for the euro area as a whole remains dim as projected potential growth is held back by weak productivity, adverse demographics, and, in some countries, unresolved legacy problems of public and private debt overhang, with a high level of non-performing loans (IMF WEO, April 2017). The European Central Bank (ECB) held its benchmark refinancing rate at 0 per cent for the ninth consecutive meeting and left the pace of its bond-purchases unchanged on 9th March 2017, as widely expected. Policymakers confirmed the monthly asset purchases will run at the current monthly pace of 80 billion until March 2018, and from April 2018, they are intended to continue at a monthly pace of 60 billion until the end of the year. Both the deposit rate and the lending rate were also left steady at -0.4 per cent and 0.25 per cent, respectively (European Central Bank, April 2017). The ECB highlighted that the Bank s monetary policy measures have continued to preserve the favourable financing conditions that are necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2 per cent over the medium term. Their ongoing pass-through to the borrowing conditions for firms and households benefit credit creation and supports the steadily firming recovery of the euro area economy (European Central Bank, April 2017). Consumer prices in the Eurozone rose by 1.5 per cent year-on-year in March 2017, easing from a 2 per cent increase in the previous month and matching preliminary estimates. This was the lowest inflation rate in three months, due to a slowdown in prices of fuels for transport, heating oil and vegetables and a drop in cost of package holidays, final figures showed (Eurostat, April 2017). The unemployment rate in the Eurozone dropped to 9.5 per cent in February 2017 from 9.6 per cent in January and in line with market expectations. It was the lowest level since May A year earlier, the unemployment was higher at 10.3 per cent (Eurostat, April 2017). 8

11 The United Kingdom: GDP growth in the UK advanced by 0.3 per cent quarter-on-quarter in the three months to March 2017, easing from a 0.7 per cent growth in the previous period and below market expectations of a 0.4 per cent expansion, a preliminary estimate showed. It was the slowest rate of growth since the first quarter of 2016, as services output expanded at a slower pace. The services aggregate grew by 0.3 per cent in the first quarter after rising by 0.8 per cent in the previous period. On a year-on-year basis the UK economy expanded by 2.1 per cent, accelerating from a 1.9 per cent expansion in the previous period but missing market expectations of a 2.2 per cent gain, a preliminary estimate showed (UK Office for National Statistics, April 2017). Growth in the UK is projected to be 2.0 per cent in 2017, before declining to 1.5 per cent in The 0.9 percentage point upward revision to the 2017 forecast and the 0.2 percentage point downward revision to the 2018 forecast reflect the stronger-thanexpected performance of the UK economy since the June Brexit vote. This points to a more gradual materialization than previously anticipated of the negative effects of the UK s decision to leave the European Union (IMF WEO, April 2017). The Bank of England Monetary Policy Committee kept the bank rate at a record low of 0.25 per cent and left the stock of purchased assets at 435 billion on 16 March 2017, in line with forecasts. Policymakers expect a slowdown in aggregate demand during this year and a rise in inflation to above the 2 per cent target in the next few months (Bank of England, April 2017). Consumer prices in the UK rose by 2.3 per cent in the year to March 2017, the same pace as in February and in line with market expectations. The inflation rate remained at its highest level since September 2013, mainly boosted by rising prices for food, alcohol and tobacco, clothing and footwear, and miscellaneous goods and services (UK National Statistics Office, April 2017). UK unemployment rate held at an almost 12-year low of 4.7 per cent in the three months to February 2017, in line with market expectations. The employment rate stood at an all-time high of 74.6 per cent as the number of people in work rose by (UK National Statistics Office, April 2017). Japan: The Japanese economy advanced by 0.3 per cent quarter-on-quarter in the three months to December 2016, above preliminary estimates of a 0.2 per cent expansion and at the same pace as in the previous period. It was the fourth consecutive quarter of growth, boosted by exports, government spending and private non-residential investment while household consumption was flat. On an annualised basis, Japan s economy grew by 1.2 per cent in the fourth quarter of 2016, above preliminary estimates of 1 per cent and following 1.2 per cent expansion in the previous period. It was the fourth straight quarter of expansion, led by external demand and capital expenditure while private consumption rose at a slower pace (Trading Economics, April 2017). In Japan, a comprehensive revision of the national accounts led to an upward revision of historical growth rates and placed the 2016 growth estimate at 1.0 per cent, significantly higher than projected in the October 2016 WEO. The growth momentum, fuelled by stronger-than-expected net exports in 2016, is expected to continue into 2017, with growth forecast at 1.2 per cent (IMF WEO, April 2017). The Bank of Japan left its key short-term interest rate unchanged at -0.1 per cent at its March 2017 meeting, hours after the Federal Reserve raised its benchmark rate. Policymakers also decided to keep the 10-year government bond yield target around zero per cent and maintained an upbeat economic view. Consumer prices in Japan rose by 0.3 per cent year-on-year in February 2017, following a 0.4 per cent rise in January and in line with market expectations. While prices of food eased sharply, inflation was steady for transport and cost of housing continued to fall. 9

12 Core consumer prices, which exclude fresh food, went up by 0.2 per cent year-on-year, compared to a 0.1 per cent increase in the prior month. It was the second straight month of rise and the highest since April On a monthly basis, consumer prices fell by 0.1 per cent, compared to a 0.1 per cent rise in January 2017 (Trading Economics, April 2017). The unemployment rate in Japan stood at 2.8 per cent in March 2017, the same as in February The figure came slightly below a market consensus of 2.9 per cent and remained at its lowest level since June Meanwhile, the jobs-to-applicants ratio was at 1.45, up from 1.43 in the previous three months and marking the highest level since November 1990 (Trading Economics, April 2017). Emerging Markets Brazil: The Brazilian economy contracted by 0.9 per cent quarter-on-quarter in the last three months of 2016, following a downwardly revised 0.7 per cent drop in the previous quarter and worse than market expectations of a 0.6 per cent fall. Household consumption declined at a steeper pace and imports recovered while investment and exports shrank less and government spending edged up (Trading Economics, 20 April 2017). Growth in Brazil is expected to emerge from one of its deepest recessions, with growth forecast at 0.2 per cent in 2017 and 1.7 per cent in The gradual recovery will be supported by reduced political uncertainty, easing monetary policy, and further progress on the reform agenda (IMF WEO, April 2017). The Central Bank of Brazil cut its key Selic rate by 75 basis points to per cent on 22 February 2017, in line with market expectations. This was the fourth straight rate decline, bringing borrowing costs to the lowest in nearly 2 years amid slowing inflation and a sticky contraction. It follows a 75 basis points cut in January 2017 (Central Bank of Brazil, April 2017). Consumer prices in Brazil went up by 4.57 per cent year-on-year in March 2017, easing from a 4.76 per cent rise in February and compared to market expectations of a 4.54 per cent increase. The inflation rate slowed for the seventh month to the lowest since August 2010, remaining slightly above the central bank s official target of 4.5 per cent (Trading Economics, April 2017). The unemployment rate in Brazil rose to a new record high of 13.2 per cent in the three months ended February 2017 from 11.9 per cent in the three months to November 2016 and in line with market expectations. The number of unemployed jumped by 11.7 per cent to million people while employment fell by 1 per cent to million, bringing the employment rate to a record low of 53.4 per cent (Trading Economics, 20 April 2017). Russia: The Russian economy advanced by 0.3 per cent in the fourth quarter of 2016, following 0.4 per cent contraction in the previous period. It was the first expansion since the fourth quarter of 2014 with net external demand contributing positively to growth. Meanwhile, government consumption fell 0.5 per cent, the same pace as in the previous period. In 2016, the GDP shrank by 0.2 per cent (Trading Economics, April 2017). Growth in Russia is expected to remain stable at 1.4 per cent in 2017 and 2018, respectively (IMF WEO, April 2017). The Central Bank of Russia lowered its benchmark one-week repo rate by 25 basis points to 9.75 per cent on 24 March 2017, while markets expected no change in rates. Policymakers signalled the possibility of further cuts in the second and third quarter of 2017, as inflation slowdown overshoots the forecast, inflation expectations continue to decline and economic activity recovers (Central Bank of Russia, April 2017). The Bank forecasts that the annual consumer price growth will reduce to 4 per cent by the end of 2017 and will remain within this target range in (IMF WEO, April 2017). Consumer prices in Russia increased by 4.3 per cent year-on-year in March 2017, easing from a 4.6 per cent rise in the previous month and 10

13 in line with market expectations. It was the lowest inflation rate since June On a monthly basis, prices edged up by 0.1 per cent after advancing by 0.2 per cent in February (Federal State Statistics Service, April 2017). The unemployment rate in Russia declined to 5.4 per cent in March 2017 from 5.6 per cent in the previous month and below market expectations of 5.6 per cent. A year ago, the unemployment rate was 6 per cent (Federal State Statistics Service, April 2017). India: The Indian economy expanded by 1.6 per cent quarter-on-quarter in the three months to December 2016 compared to 1.8 per cent in the third quarter of In India, the growth forecast for 2017 has been trimmed by 0.4 percentage point to 7.2 per cent, primarily because of the temporary negative consumption shock induced by cash shortages and payment disruptions from the recent currency exchange initiative. In 2018 GDP growth is expected to gain momentum, rising up to 7.7 per cent (IMF WEO, April 2017). The Reserve Bank of India left its key repo rate unchanged at 6.25 per cent for the second time at its February 2017 meeting, compared to expectations of a 25 basis points cut. Policymakers decided to change the stance from accommodative to neutral while assessing the effects of demonetisation on inflation and growth. The reverse repo rate was also kept at 5.75 per cent. (Reserve Bank of India, April 2017). Consumer prices in India increased by 3.81 per cent year-on-year in March 2017, following a 3.65 per cent rise in February and below market expectations of 3.98 per cent. Food inflation slowed to 1.93 per cent from 2.01 per cent (Trading Economics, April 2017). China: The Chinese economy advanced by 1.3 per cent, quarter-on-quarter in the three months to March 2017 following a 1.7 per cent growth in the previous quarter and missing market estimates of a 1.6 per cent growth. It was the weakest expansion since the March quarter of Year-on-year, the economy advanced by an annualised 6.9 per cent, compared to a 6.8 per cent growth in the previous three quarters. It was the strongest expansion since the September quarter For 2017, the Chinese government expects the economy to grow by around 6.5 per cent; compared to a 6.7 per cent expansion in 2016, which was the slowest growth in 26 years (China National Bureau of Statistics, April 2017). According to the IMF, GDP growth in China is projected at 6.6 per cent in 2017, slowing to 6.2 per cent in 2018, reflecting the anticipation of continued policy support in the form of strong credit growth and reliance on public investment to achieve growth targets. The Peoples Bank of China (PBoC) raised the interest rate it charges on short-term openmarket operations by 10 basis points on 16 March 2017, due to strengthening market expectations for higher funding costs in light of rising domestic inflation and property prices, in addition to the Federal Reserve s rate increase. It was the second adjustment in short-term interest rates since early February 2017 (The PBoC, April 2017). China s consumer prices rose by 0.9 per cent year-on-year in March 2017, following a 0.8 per cent rise in February 2017 but slightly less than market consensus of a 1.0 per cent gain. Cost of non-food items rose more than in the prior month while cost of food continued to fall. On a monthly basis, consumer prices fell 0.3 per cent, following a 0.2 per cent drop in a month earlier and matching market consensus (China Bureau of Statistics, April 2017). Unemployment rate in China decreased to 3.97 per cent in the first quarter of 2017 from 4.02 per cent in the fourth quarter of Unemployment Rate in China averaged 4.12 per cent from 2002 until 2017 (China Bureau of Statistics, April 2017). 11

14 FIGURE 1: GOLD & OIL PRICES (US DOLLARS); MARCH MARCH Gold ($) Oil ($) 1050 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 0 Gold Oil Source: indexmundi.com 3. ECONOMIC DEVELOPMENTS IN SOUTH AFRICA The South African economy contracted by an annualized 0.3 per cent quarter-on-quarter in the three months to December 2016, compared to an upwardly revised 0.4 per cent growth in the previous quarter and missing a market consensus of a 0.5 per cent expansion. It was the first contraction since the quarter ended March The largest negative contributor to the contraction in GDP was the mining and quarrying industry, which decreased by 11.5 per cent and contributed -0.9 per cent to growth. In 2016 the economy expanded by 0.3 per cent slowing from a 1.3 per cent expansion in 2015 (Statistics South Africa, April 2017). According to the IMF, a modest recovery is expected, with growth forecast at 0.8 per cent in 2017 and 1.6 per cent in 2018 as commodity prices rebound, drought conditions ease, and electricity capacity expands. FIGURE 2: SOUTH AFRICA GDP; DECEMBER DECEMBER q-o-q % change Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Source: Statistics South Africa 12

15 The South African Reserve Bank kept its benchmark repo rate on hold at 7 per cent at its meeting on 30 March 2017, in line with expectations. Policymakers said the inflation outlook has improved although the exchange rate became a risk due to recent political uncertainties. Policymakers added that the end of the tightening cycle might have been reached and the inflation forecast of the Bank has improved, reversing most of the deterioration observed at the previous meeting of the Monetary Policy Committee. Inflation is expected to average 5.9 per cent for the year, compared with 6.2 per cent in the previous forecast, while the forecast for 2018 has moderated from an average of 5.5 per cent to 5.4 per cent. However, the risk to the inflation forecast has been affected by the reaction of the exchange rate to the current elevated levels of political uncertainty (South Africa Reserve Bank, March 2017). Consumer prices in South Africa increased by 6.1 per cent year-on-year in March 2017, lower than a 6.3 per cent rise in February and below market expectations of 6.3 per cent. This was the lowest inflation rate in six months due to a slowdown in food inflation. On a monthly basis, consumer prices rose 0.6 per cent in March 2017, below 1.1 per cent in February and boosted by cost of housing and utilities, education, food and non-alcoholic beverages, and alcoholic beverages and tobacco (Statistics South Africa, April 2017). The unemployment rate in South Africa fell to 26.5 per cent in the last three months of 2016 after reaching a 12-1/2-year high of 27.1 per cent in the previous period. Employment rose while unemployment fell and more people continued to join the labour force, bringing the participation rate up to a new high since 2002 (Statistics South Africa, April 2017). FIGURE 3: SOUTH AFRICA PPI AND CPI; MARCH MARCH 2017 Year-on-year % change Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 PPI CPI Source: Statistics South Africa 13

16 4. DOMESTIC ECONOMIC DEVELOPMENTS 4.1. General Overview Headline Inflation According to the Central Statistics Office, headline inflation slowed to 7.0 per cent in the first quarter of 2017 from 8.5 per cent in the previous quarter mainly benefiting from a moderation in food and transport inflation. The improvement in weather conditions has somewhat eliminated the effects of the El Nino induced drought and thus food production is expected to rebound from low levels of the previous year. The anticipated better harvest has helped ease increases in food prices. After reaching a record high of 19.0 per cent in December 2016, food inflation moderated to 10.3 per cent in March 2017 and averaged 13.5 per cent in the first quarter of 2017 compared to 18.4 per cent in the last quarter of Slower increases in food price components mainly came from prices of cereals, pasta products and oils and fats. Transport inflation also recorded a significant moderation from 9.4 per cent in the quarter ended December 2016 to 4.1 per cent in the quarter under review largely due to high base effects of the previous year. Despite fuel price increases (of 80 cents per litre) effected in February 2017, transport inflation decelerated because of high base effects that came from the 25 per cent increase in public transport fares implemented in February 2016 which kept transport inflation at elevated levels throughout 2016, an effect that came to an end in February Price increases for other components excluding food and transport averaged 4.7 per cent in the quarter under review compared to 4.0 per cent in the previous quarter. Increases were mainly noted in the price indices for education recreation and culture and furnishing and household equipment. The index for education increased by 3.4 percentage points to 5.8 per cent in the quarter under review mainly reflecting relatively higher increases in school fees relative to the previous year. The index for furnishing and household equipment and recreation and culture increased by 0.6 and 2.5 percentage points respectively. Core inflation measured as CPI excluding food and non-alcoholic beverages, fuel and energy averaged 4.7 per cent in the quarter ended March 2017 same as it was in the previous quarter. FIGURE 4: INFLATION TRENDS; MARCH MARCH 2017 Year-on-Year % Change Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Food Transport Headline Inflation Other Source: Central Statistics Office 14

17 The country s headline inflation is expected to be contained in 2017 mainly driven by the favourable rains received during the first quarter of 2017 which has prompted food commodity prices to drop. The prospect of a better harvest has exerted downward pressure on food prices particularly maize prices. Regional maize prices reported by the South African Future Exchange (SAFEX) reflect that maize prices have been on a downward trend for most part of the second half of 2016 and opening months of 2017, decreasing by 25.2 per cent between the quarter ended December 2016 and the quarter under review. Following the continuous decreases in SAFEX maize prices in South Africa, which are a reference price for Swaziland s maize imports, Swaziland s maize wholesaler, the National Maize Corporation (NMC) announced that domestic maize prices will drop by 17 per cent effective April This represents a partial reversal of maize prices by NMC who increased maize prices by 66 per cent in the same period the previous year. This would be favourable for food price developments in the short to medium term and since the food component carries the highest weight in the CPI basket, these favourable developments would be translated to overall inflation. Inflationary pressures emanating from recent upward adjustments in administered prices remain on the high side in the medium term. The Swaziland Electricity Company was granted a 15 per cent two-year tariff hike for the 2017/18 and 2018/19 financial years which is effective 1st April of each year. Other administered price adjustments include the 50 cents increase in the price of bread effected in December 2016 which resulted from increased prices of cereals and other products observed in 2016 as a result of the drought. Though these increases portray the persistent second round effects of the drought on processed foods and other commodities, they are expected to moderate as the country returns to normal weather conditions. A combination of a stronger Lilangeni and contained international oil prices would also contribute to deflationary pressures in the medium term. High base effects from previous year administered price increases in the transport category would also feed into deflationary pressures during the course of Exchange Rate/Real Effective Exchange Rate During the first quarter of 2017 the external value of the Lilangeni strengthened against major currencies. The domestic unit averaged E13.23 against the US dollar in the first quarter of 2017 strengthening from an average of E13.91 recorded in the previous quarter. The Lilangeni strengthened as the Rand gained confidence from South Africa s budget speech, the previous quarter current account improvement and inflation subsiding. The local unit ended the period under review at E13.35 to the US dollar, E16.63 to the Pound Sterling and E14.35 to the Euro. 15

18 FIGURE 5: MONTHLY LILANGENI S NEER/REER INDICES; MARCH 2016 MARCH 2017 ( ) Index Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 NEER REER Source: Central Bank of Swaziland FIGURE 6: CROSS ATLANTIC CURRENCY RATES; MARCH MARCH Mar-16 Apr-16 May-16 Emalangeni Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 E/GBP E/USD Source: Central Bank of Swaziland 16

19 FIGURE 7: BASKET CURRENCY RATES; MARCH MARCH Emalangeni Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 E/SDR E/EURO Source: Central Bank of Swaziland 4.2 MONETARY SECTOR Net Foreign Assets During the first three months of 2017, net foreign assets fell by 19.9 per cent to reach E7.1 billion; contrary to the 25.2 per cent growth recorded during the last quarter of The decline in net foreign assets was discernible in net official assets as well as net foreign holdings of other depository corporations. Net foreign holdings of other depository holdings, went down by 58.3 per cent compared to an increase of 83.6 per cent recorded in the previous quarter. On the other hand, net official assets decreased by 5.6 per cent quarter-on-quarter to E6.1 billion, having increased during the previous quarter. When valued in Special Drawing Rights (SDR), net foreign assets amounted to SDR390.5 million reflecting a decline of 18.4 per cent from the quarter ended December The lower decline in SDR terms was a result of the slight strengthening of the exchange rate against the country s major trading currencies. Compared on an annual basis, the net foreign assets fell by 18.9 per cent in Emalangeni and by 7.2 per cent in SDR terms. FIGURE 8: NET FOREIGN ASSETS; MARCH MARCH 2017 E Billion Mar Jun Sep Dec Mar Jun Sep Dec Mar SDR Billion E SDR Source: Central Bank of Swaziland 17

20 4.2.2 Gross Official Reserves Over the quarter ended March 2017, gross official reserves eased by 5.2 per cent to reach E7.3 billion. The reserves were enough to cover an estimated 3.4 months of imports of goods and services, lower than the 3.6 months covered at the end of December 2016 but remained above the internationally recommended benchmark of 3 months. When valued in SDR terms, the reserves amounted to SDR404.4 million, indicating a quarter-onquarter decline of 3.3 per cent after growing by 8.3 per cent in the preceding quarter. When compared on an annual basis, the reserves fell by 1.3 per cent when valued in SDRs and by 13.7 per cent when valued in Emalangeni terms. FIGURE 9: GROSS OFFICIAL RESERVES & IMPORT COVER; MARCH MARCH 2017 E Billion Cover in Months Mar Jun Sep Dec Mar Jun Sep Dec Mar Gross Official Reserves Import Cover Source: Central Bank of Swaziland and Other Depository Corporations Credit Extension Credit extended to the private sector went down by 4.5 per cent quarter-on-quarter, contrary to the 5 per cent increase observed over the quarter ended December The decrease in credit to the private sector was on account of a fall in credit to all its components in the review quarter. Credit to households dropped by 3.5 per cent compared to a rise of 1.3 per cent recorded in the previous quarter. The fall in credit to households was largely driven by credit extended for other personal loans which eased by 8 per cent quarter-on-quarter. Credit for motor vehicle finance waned by 2.1 per cent over the quarter, indicating a slight improvement from the 4.8 per cent fall registered at the end of the previous quarter. Mortgage finance, on the other hand deteriorated by 1.9 per cent compared to a lower decline of 1.6 per cent recorded during the quarter ended December

21 FIGURE 10: PRIVATE SECTOR CREDIT; MARCH MARCH 2017 E Billion Mar Jun Sep Dec Mar Jun Sep Dec Mar Credit to Other Sectors Credit to Households Credit to Businesses Total Private Sector Credit Source: Central Bank of Swaziland and Other Depository Corporations Credit extended to other sectors plummeted by 18 per cent during the review quarter from growth of 27.7 per cent recorded at the end of the fourth quarter. The reduction in credit to other sectors was mainly a result of a fall of 27.4 per cent in credit to other financial corporations. Credit extended to the local government sector also tumbled by 11.3 per cent compared to a lower decrease of 6 per cent at the end of the quarter ended December Credit to public non-financial corporations, on the other hand expanded by 10.8 per cent during the review quarter, from 5 per cent recorded in the preceding quarter. Credit to businesses contracted by 2.6 per cent during the review quarter to close at E5.7 billion. The decline in credit to businesses was largely reflected in the manufacturing (36 per cent), community, social and personal services (15 per cent) and real estate (9.4 per cent) sectors. However, quarter-onquarter increases in credit to businesses were registered in the agriculture and forestry (16 per cent), construction (9.9 per cent) as well as distribution and tourism (7.5 per cent) sectors. FIGURE 11: PRIVATE SECTOR CREDIT COMPOSITION; MARCH MARCH Percent Mar Jun Sep Dec Mar Jun Sep Dec Mar Other Sector Businesses Households Source: Central Bank of Swaziland and Other Depository Corporations 19

22 When considered by proportions, over the review quarter, a large share of private sector credit was accounted for by households and businesses. Households accounted for 46 per cent of total private sector credit while businesses accounted for 45.9 per cent, slightly higher than the proportions recorded during the quarter ended December Other sectors represented a share of 8.1 per cent of total credit to the private, lower than the share of 9.4 per cent recorded in the previous quarter. Net Government Balances within the banking sector declined to E798.7 million at the end of March 2017, lower than the E833.6 million recorded at the end of fourth quarter. The reduction in net government balances was mostly due to a higher growth in claims on government compared to government deposits with the banking sector. The banking sector s claims on government amounted to E3.5 billion, up from E3.3 billion observed at the end of December Government deposits closed at E4.3 billion at the end of March 2017, indicating slightly higher growth from E4.2 billion recorded at the end of December FIGURE 12: NET GOVERNMENT BALANCES WITH THE BANKING SECTOR; MARCH MARCH Mar Jun Sep Dec Mar Jun E Billion Sep Dec Mar Claims on Central Government Government Deposits Source: Central Bank of Swaziland and Other Depository Corporations Money Supply In line with the deceleration in private sector credit extension, broad money supply (M2) also went down from E16.7 billion at the end of December 2016 to reach E14.4 billion at the end of March The decrease in M2 was on account of a fall in both narrow money (M1) and quasi money supply. M1 shrank by 21.5 per cent in the quarter ended March 2017, differing from the growth of 25.3 per cent recorded at the end of December The fall in M1 was on account of a decline in both transferable deposits and currency outside depository corporations. Transferable deposits plunged by 23.7 per cent in the quarter ended March 2017 to close at E4.1 billion. Currency outside depository corporations on the other hand receded by 2.4 per cent from the previous quarter to reach E594.5 million at the end of March Quasi money supply declined by 9.8 per cent during the quarter ended March 2017, having increased by 10.1 per cent at the end of 20

23 December The reduction in quasi money supply was observed in both its components, savings and time deposits. Time deposits closed at E7.9 billion at the end of the first quarter of 2017, depicting a reduction of 11.2 per cent. Savings deposits dropped by 2.7 per cent after increasing by 0.5 per cent in the fourth quarter of FIGURE 13: MONEY SUPPLY; MARCH MARCH Mar Jun Sep Dec Mar Jun Sep Dec Mar E Billion Narrow Money Quasi Money Broad Money Source: Central Bank of Swaziland and Other Depository Corporations Domestic Liquid Assets At the end of the first quarter of 2017, domestic liquid assets amounted to E3.5 billion, depicting a contraction of 17.2 per cent from the previous quarter. The fall in commercial banks domestic liquid assets was primarily due to a decrease in commercial banks cash holdings and balances held with the Central Bank. Consequently, the liquidity ratio closed at 28.5 per cent at the end of March 2017, lower than the 28.7 per cent recorded at the end of December FIGURE 14: DOMESTIC LIQUID ASSETS AND LIQUIDITY RATIO; MARCH 2015 MARCH 2017 Domestic Liquid Assets (E Billion) Mar Jun Sep Dec Mar Jun Sep Dec Mar Liquidity Ratio (Per cent) Domestic Liquid Assets Liquidity Ratio Source: Central Bank of Swaziland and Other Depository Corporations 21

24 FIGURE 15: MONETARY BASE, DEPOSITS & LOANS; MARCH MARCH E Billion Mar Jun Sep Dec Mar Jun Sep Dec Mar Monetary Base Deposits Loans Source: Central Bank of Swaziland and Depository Corporations Interest Rates During the quarter under review, interest rates increased in January 2017 and thereafter left unchanged in March The rates increase was a response to a restrictive monetary policy stance pursued by the Bank in an effort to curtail inflationary pressures. Consequently, the discount rate increased by 25 basis points to 7.25 per cent while the banks prime lending rate increased by the same margin to per cent. The interest rates increase resulted in a 25 basis points differential between the local discount rate and the South African repo rate. FIGURE 16: INTEREST RATES: MARCH 2015 MARCH 2017 E Billion Mar Jun Sep Dec Mar Jun Sep Dec Mar Discount Rate Prime Rate Source: Central Bank of Swaziland and Other Depository Corporations Survey 22

25 TABLE 2: SWAZILAND COMPARATIVE INTEREST RATES AS AT 31ST MARCH 2017 NEDBANK STANDARD BANK FNB SWAZI BANK BLDG. SOCIETY Effective Date: RETAIL Call* Up to 3.20 Special. Savings days* Up to 4.95 Gold a/c days* Up to 5.35 Subs shares months* Up to months months* Up to months 5.4 Savings (See table 3 below) Effective Date: Prime Lending Residential: 9.75 Commercial : Source: Commercial Banks & Building Society *Higher rates may be quoted on application for large amounts and subject to negotiation with individual customers TABLE 3: SAVINGS DEPOSIT RATES FOR BANKS & BUILDING SOCIETY AS AT 31ST MARCH 2017 RANGE RATE (%) RANGE RATE (%) Standard: E E Nedbank: E E 19, E 1,000 - E 4, E 20,000 - E 49, E 5,000 - E 9, E 50,000 - E 79, E 10,000 - E 99, E 80,000 & E99, E 100,000 - E 149, E100,000 & Above E 150,000 - E 249, E 250,000 & Above S.D.S.B: E E E 1,001 - E 10, E 10,001 - E 50, E 50,001 & Above 1.35 FNBANK : E E Building Society: Ordinary Savings 2.25 E 1,000 - E 4, E 5,000 - E 14, E 15,000 - E 19, E 20,000 - E 24, E 25,000 - E 49, E 50,000 - E 74, E 75,000 - E 99, E 100,000 - E 149, E 150,000 - E 249, E250,000 & Above Source: Commercial Banks & Swaziland Building Society 23

26 4.3 MONEY AND CAPITAL MARKETS Swaziland Government Treasury Bills Treasury Bills outstanding decreased by a margin of around 1 per cent from E1.674 billion in December 2016 to E1.657 billion at the end of March Participation continued to be dominated by the local commercial banks and building society. Their percentage holdings increased from per cent in the previous quarter to per cent during the quarter under review. This was attributed to the reduced appetite for treasury bills by non-banking financial institutions. The Central Bank of Swaziland holdings decreased by E0.96 million from E3.18 million to E2.22 million in the quarter ending March Holdings by Other Participants which include individuals, savings co-operatives, private companies among others, increased by 17 per cent from E83.57 million in the previous quarter to E98 million at the end of March TABLE 4: HOLDINGS OF SWAZILAND GOVERNMENT TREASURY BILLS (E MILLION) Sep 2016 Dec 2016 Mar 2017 Total 1, , , Of which: Local Commercial Banks and Building Society 1, , , Foreign Banks Non-Bank Financial Institutions Central Bank of SWD (OMO) Other Average Discount (%) Average Yield (%) % of Total Government Domestic Debt Source: Central Bank of Swaziland FIGURE 17: TREASURY BILLS & THE AVERAGE DISCOUNT RATE; JUNE 2016 MARCH , , E Million 1, , Per cent Jun 16 Sep 16 Dec 16 Mar T-bills Average Discount Source: Central Bank of Swaziland 24

27 4.3.2 Swaziland Government Bonds The value of Government bonds outstanding at the end of March 2017 increased from E2.739 billion recorded in December 2016 to close at E3.133 billion. The increase was mainly attributed to the medium term notes issued under the suppliers bond programme during the quarter. Percentage holdings by Non-Bank Financial Institutions slightly increased from 56 per cent in the previous quarter to 62 per cent in the quarter under review. The percentage holdings by commercial banks including the building society showed a slight decrease from 36 per cent in the previous quarter to 33 per cent in the quarter under review. Other participants and individuals holdings remained almost constant from the previous quarter at E138.9 million at the end of March TABLE 5: HOLDINGS OF SWAZILAND GOVERNMENT BONDS (E MILLION) Sep 2016 Dec 2016 Mar 2017 Total 2, , , Banks and Building Society , Non-Bank Financial Institutions 1, , , Other Central Bank of SWD (OMO) Foreign Banks (%) of Total Government Domestic Debt Source: Central Bank of Swaziland TABLE 6: SWAZILAND GOVERNMENT BONDS LISTED ON SSX Bond Coupon Redemption Date Nominal Value SG % 31/01/ SG % 31/08/ SG % 31/10/ SG % 31/01/ SG % 30/06/ SG % 20/10/ SG % 30/07/ SG % 25/09/ SG % 30/11/ SG % 30/11/ SG % 31/05/ SG % 20/06/ SG026(Floater) 9.00% 31/08/ SG % 31/10/ SG025 (Reopening) 10.00% 20/06/ SG % 28/02/ TOTAL Source: Central Bank of Swaziland 25

28 Bond Issuances During the period under review there was only one initial public offerings of a 5 year 10.5 per cent fixed coupon bond at the end of February. An amount of E150 million was offered and the green-shoe option was not exercised for this bond. A total amount of E million was allotted with E129 million being competitive bids allotted from E167 million bids received. An amount of E0.260 million was allotted in favour of non-competitive bids. In the same quarter the Bank incurred a total of E35.38 million in respect of coupon payments for the 5, 7 and 10 year bonds. No bond maturity occurred in the period under review Coupon Payments TABLE 7: FIRST QUARTER COUPON PAYMENTS Security Name Coupon Rate (%) Tenure Date Nominal Investment Coupon Amount SG Year Bond 31-Jan ,330, ,085, SG Year Bond 28-Feb ,000, ,136, SG Year Bond 31-Jan ,441, ,419, SG Year Bond 25-Mar-17 96,035, ,762, SG Year Bond 28-Feb ,650, ,973, TOTAL 794,456, ,376, Source: Central Bank of Swaziland The table below shows private placements that were issued for the year ended 31 March TABLE 8: PRIVATE PLACEMENTS Security Tenure Maturity Date Rate Issued Amount SG36MTMSWA 36 Months 2 December % 50,000, SG24MTMSBS 24 Months 2 December % 30,000, SG18MTMSBS 18 Months 2 June % 20,000, SG18MTNNED 18 Months 5 June % 100,000, SG18MTNMVA 18 Months 29 June % 20,000, SG36MTNSTD1 36 Months 22 December % 15,000, SG24MTNSTD 24 Months 22 December % 15,000, SG18MTNSTD 18 Months 22 June % 20,000, SG18MTNFNB 18 Months 23 June % 20,000, SG36MTNFNB 36 Months 23 December % 20,000, SG12MTNSMF 12 Months 31 January % 60,000, SG12MTNMMF 12 Months 31 January % 60,000, SG60MTNAAS 12 Months 10 February % 30,000, SG12MTNOMS 60 Months 24 February % 15,000, SG36MTNOMS 36 Months 24 February % 10,000, SG12MTNSBSM 12 Months 24 February % 50,000, SG24MTNSBSM2 24 Months 4 April % 40,000, TOTAL 575,000, Source: Central Bank of Swaziland 26

29 FIGURE 18: TREASURY BILLS & BONDS; JANUARY 2017 MARCH , , , E Millions 2, , , Jan 17 Feb 17 Mar 17 T-Bills Bonds Source: Central Bank of Swaziland 4.4 PUBLIC EXTERNAL DEBT Debt Stock Preliminary debt figures for the quarter ending March 2017 indicate that public sector external debt increased in nominal terms. The increase was mainly attributed to the disbursements of loans for on-going Government capital projects. As at the end of March 2017, total public external debt (including public and publicly guaranteed debt) stood at E5.2 billion, an equivalent of 8.9 per cent of GDP. This reflects an increase of 6.1 per cent when compared to the E4.9 billion recorded in the quarter ending December External debt for Central Government increased from E4.8 billion in December 2016 to record E5.1 billion at end of March Disbursements Total public external debt disbursements for the quarter ending March 2017 amounted to E468.9 million. The disbursements were associated with loans from the following institutions and/or Governments: y African Development Bank (AfDB) for Ezulwini Water Supply & Sanitation Delivery Project; y Arab Bank for Economic Development in Africa (BADEA) for the Sicunusa-Nhlangano Road; y Export-Import Bank of India (EXIM) for Agricultural Farm Inputs; y EXIM Bank of China for International Convention Centre; y International Bank for Reconstruction & Development (IBRD) for Local Government Project; and y Kuwait for Manzini-Mbadlane Road Debt Service For the quarter ending March 2017, total debt service amounted to E86 million. Of this amount, principal repayments accounted for E68 million with interest payments recorded at E18 million. Swaziland s debt ratios have remained reasonably low compared to other African countries based on debt critical ratios for Low Income Countries established by the Bretton woods Institutions (IMF & World Bank). 27