The country’s economic horizon is looking bright and in a major win for the pockets of Emaswati, the cost of living (CoLA) is set to remain stable through 2026.
The Central Bank of Eswatini (CBE) has maintained its medium-term inflation forecast at a steady 3.97%, signaling a period of much-needed relief for both households and the business community.
According to CBE Governor Dr Phil Mnisi delivering his monetary policy statement for June on Friday, the decision to maintain this forecast was supported by three critical economic levers that have performed better than initially anticipated in early 2025.
The primary driver of the favourable outlook is a lower-than-expected food inflation outturn.
After a period of heightened prices that strained the pockets of local consumers, the rate of increase in food costs has begun to moderate.
This downward trend is essential for the 2026 forecast, as food remains a significant component of the consumer price basket.
According to Dr Mnisi, the second pillar of CBE’s 3.97% forecast is a stronger exchange rate assumption.
The Lilangeni (SZL), pegged to the South African Rand (ZAR), has shown significant resilience against major international currencies. A stronger exchange rate effectively subsidises imports, reducing the cost of machinery, vehicles and electronics brought into the country.
ALSO READ | Economic fundamentals getting stronger – Business Eswatini
The governor further cited stable oil prices as a key contributor to the 3.97% target.
Fuel costs are a foundational expense for local transport and manufacturing sectors.
With global oil markets reaching a state of relative equilibrium, the bank expects a reduction in the volatility of pump prices. Stable energy costs translate to lower production and distribution overheads for businesses, preventing a knock-on effect that would typically drive up the price of general goods and services.
Dr Mnisi also highlighted that inflationary pressures in the local economy remain well-contained.
“The country’s annual consumer price inflation declined by 0.1 of a percentage point to be recorded at 2.3% in December 2025,” said Dr Mnisi.
Meanwhile, neighbouring South Africa’s inflation increased to 3.6% in December 2025 from 3.5% in November 2025, “recording an average 3.2% for the year”.
While the economic outlook is positive, Dr Mnisi noted an increase in total public debt, which stood at E40.2 billion in December 2025.
This translates to approximately 41.8% of GDP.
The governor further indicated that preliminary figures show that the country’s gross official reserves were recorded at E11.9 billion as of late January, providing a cushion of 2.8 months of import cover.
Dr Mnisi concluded by reaffirming the bank’s mission to foster a stable financial environment, stating CBE would continue to monitor the currency peg and global developments to act appropriately and promptly as conditions evolve.
