The Central Bank of Eswatini (CBE) has increased its discount rate by 25 basis points to 7.00 per cent, effective from September 26, 2026. This move is expected to lead to higher borrowing costs for households and businesses. The decision was made after considering global, regional, and domestic economic developments, alongside the Bank's mandate to maintain price and financial stability.
The increase in the discount rate brings it back to the level at which it stood before the May 2025 reduction, when it was lowered from 7.00 per cent to 6.75 per cent. Commercial banks are expected to increase the prime lending rate on loans extended to individuals and businesses to 10.50 per cent until the next monetary policy meeting. This change will likely affect households with mortgages, vehicle finance, personal loans, and other credit facilities.
The CBE's decision marks the first increase in Eswatini's discount rate since May 2025. The rate had remained unchanged for more than a year before Friday's decision. According to CBE Governor Dr. Phil Mnisi, the decision was taken after careful consideration of various economic factors. The increase comes against a backdrop of continued expansion in private-sector credit.
In July 2026, credit extended to the private sector increased by 0.2 per cent month-on-month to E23.8 billion. Credit to households and non-profit institutions serving households increased by 0.6 per cent to E10.0 billion, while credit extended to businesses stood at E12.9 billion on a year-on-year basis. Overall private-sector credit extension was 11.4 per cent higher year-on-year.
The higher interest-rate environment comes at a time when businesses and consumers are already making significant use of credit. This increase in borrowing costs may put additional pressure on households and businesses that rely heavily on credit. The CBE's move is expected to have a ripple effect on the economy, influencing lending rates and ultimately impacting economic growth.
The increase in borrowing costs may affect businesses' financing costs on working-capital facilities, overdrafts, expansion loans, and other forms of borrowing. Households may also face higher costs for mortgages, vehicle finance, and personal loans. The CBE's decision aims to maintain price and financial stability, but it may have implications for economic growth and employment.
The Central Bank of Eswatini's decision to raise the discount rate is a significant move to control inflation and maintain financial stability. The impact of this decision will be closely monitored by economists, businesses, and households. As borrowing costs rise, individuals and businesses will need to reassess their financial plans and strategies to adapt to the changing economic environment.
Key points
- The Central Bank of Eswatini increased its discount rate to 7.00 per cent, effective from September 26, 2026.
- The increase in the discount rate is expected to lead to higher borrowing costs for households and businesses.
- Private-sector credit extension in Eswatini increased by 11.4 per cent year-on-year in July 2026.
