Swaziland is expected to remain a member of the Common Monetary Area (which also comprises Lesotho, Namibia and South Africa) throughout the forecast period, and the lilangeni will continue to be pegged at parity to the South African currency, the rand. Monetary policy will thus continue to be determined by developments in South Africa. The Central Bank will closely follow the repurchase rate set by the South African Reserve Bank (SARB)-currently at 11%-in order to maintain interest-rate parity and prevent speculative capital flows between Swaziland and South Africa. The SARB will maintain a hard line on inflation-it is keen to preserve the credibility of its in-flation target range of 3-6%-by continuing its tight monetary policy. We expect the SARB to ease interest rates gradually over 2008-09 as inflation subsides.