Mozambique: State revenues from concessions up 40% last year to €76.5M
Noticias
The Monetary Policy Committee of the Bank of Mozambique announced on Wednesday that it is holding its benchmark interest rates steady.
Thus the Standing Lending Facility (the interest rate paid by the commercial banks to the central bank for money borrowed on the Interbank Money Market) will remain at 23.25 per cent, the level to which it was hiked in October.
The Standing Deposit Facility (the rate paid by the central bank to the commercial banks on money they deposit with it) remains at 16.25 per cent. Likewise, the Compulsory Reserves Coefficient – the amount of money that the commercial banks must deposit with the Bank of Mozambique – also remains unchanged at 15.5 per cent.
The governor of the Bank of Mozambique, Rogerio Zandamela, told a Wednesday press conference, that the sharp interest rate rises of October were having the desired effect of mopping up excess liquidity and halting the depreciation of the Mozambican currency, the metical.
On Tuesday, the US dollar was quoted at an average of 72.4 meticiais to the dollar in the commercial banks. This meant that, since 7 October, the metical had gained 7.8 per cent against the dollar. The annual depreciation of the metical against the dollar was now 31 per cent.
As for the South African rand, it was quoted at 5.33 meticais to the rand on Tuesday, an appreciation of 7.4 per cent over the same period. The annual depreciation of the metical against the rand is now around 41 per cent. The recovery against the rand is significant, since it should lead to a reduction in the prices of food and drink imported from South Africa.
Zandamela also announced that the drain on Mozambique’s net foreign reserves has been reversed. Since November the commercial banks have sold 174 million dollars to the central bank. This was the main factor in pushing the reserves up to 1.754 billion dollars, enough to cover 3.5 months of imports of goods and non-factor services (excluding the imports of the foreign investment megaprojects).
The reserves had stood at just short of two billion dollars at the end of 2015, but had fallen to 1.676 billion in October.
The increase in the compulsory reserve coefficient decreed in October took effect on 22 November, and Zandamela credited it with mopping up two thirds of the primary liquidity of the commercial banks which fell from 7.5 to 2.5 billion meticais.
As for inflation, the consumer price index for the three largest cities (Maputo, Nampula and Beira) showed a monthly inflation rate of 2.89 per cent in November, and an annual rate of 26.83 per cent.
The high November rate was largely due to government determined increases in the prices of electricity and water (37 and 11 per cent respectively). Nothing similar was in the pipeline for this month, and Zandamela expected 2016 to end with annual inflation of around 27 per cent – considerably lower than the over 30 per cent he had been predicted in October.
Further good news was a recovery in the world market prices of several of Mozambique’s key exports. Thus over the preceding year (1 December 2015 to 30 November 2016), the prices of thermal coal rose by 68.5 per cent, of natural gas by 49.9 per cent, of aluminium by 19.8 per cent, of sugar by 32.6 per cent and of cotton by 20.4 per cent. The wheat and rice that Mozambique must import have both fallen in price by 19.5 per cent.
Zandamela expected the positive trends to continue into 2017 – but if they do not, the Bank of Mozambique will take “corrective measures” even before the next meeting of the Monetary Policy Committee, scheduled for mid-February.
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