Mozambique: Port of Maputo wants to invest in rail transport, which has already grown 8% in 2023
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The Monetary Policy Committee of the Bank of Mozambique on Monday announced that it is holding its benchmark interest rates steady, but is preparing to introduce an entirely new reference rate.
Speaking at a Maputo press conference, the governor of the central bank, Rogerio Zandamela, said 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.
But as from 15 April, the Bank will introduce a new interest rate, to be known as the monetary policy rate. The Bank’s interventions on the interbank money market to regulate liquidity will be based on this new rate.
With the introduction of the new rate, “it is intended to strengthen the mechanism for forming interest rates on the market as a whole, making it more transparent and in line with good international practices”, said Zandamela.
The new rate will not exactly replace the Standing Lending and Deposit Facilities. “These rates will continue”, said Zandamela. “They will co-exist with a new model, and they will form a corridor within which the new monetary policy rate will fluctuate. The rate will not rise above or sink below this corridor”.
The central bank, he added, will intervene daily in the interbank market to ensure that the new rate remains within these parameters.
For the first time, the Bank of Mozambique will, as from 3 April, have an exchange rate of its own, rather than simply citing the exchange rates fixed by the commercial banks. The central bank rate, Zandamela said, will be an average of all the exchange rates used by the commercial banks in dealing with their clients.
As from late 2016, the commercial banks have been obliged to report their exchange rates to the Bank of Mozambique three times a day. “So we are following what the banks do on the exchange market throughout the day”, said Zandamela. “With this information, we shall be able to use the average of all the banks’ rates to fix a single exchange rate of the Bank of Mozambique”.
One surprise move from the Monetary Policy Committee was to abolish the limit on the use of Mozambican credit and debit cards outside the country. In December 2015, Zandamela’s predecessor, Ernesto Gove, announced that huge amounts of money were leaving the country through the unrestrained use of credit and debit cards abroad.
In 2012 the use of bank cards abroad drained the country of around 300 million US dollars a year, but by late 2015 the figure had reached 800 million dollars a year. Gove pointed out that cards can also be used in money laundering, and other criminal purposes.
So the central bank decreed that nobody could use bank cards outside the country to withdraw funds or make purchases in excess of 700,000 meticais (about 15,380 US dollars, at the exchange rate of the time) a year.
But on Monday, the Monetary Policy Committee revoked this measure. Zandamela claimed that the moments of crisis which had led to the measure were now over, with greater exchange rate stability since late 2016, and increased confidence by businesses in the Mozambican currency.
As from now, there would be no restrictions on spending abroad – if they wanted, Mozambicans could spend everything in their bank accounts on credit and debit card purchases abroad, Zandamela said.
The metical was now recovering somewhat against the dollar. The figures given by Zandamela showed that between the end of November and the end of January the metical had appreciated against the dollar by 6.6 per cent.
But the same could not be said for the value of the metical against the South African rand, the currency in which most imported food and drink is denominated. Over the same period the metical depreciated against the rand by about two per cent. But in the first fortnight of February, the metical has slowly gained ground against both the dollar and the rand, and the forecast is for relative exchange rate stability for the rest of the year.
The halt to the sharp depreciation of the metical that had characterized the first nine months of 2016 was a key factor in slowing down the rate of inflation. Annual inflation, Zandamela noted, fell from about 27 per cent in November, to 25.27 per cent at the end of December, to 20.56 per cent at the end of January.
Mozambique’s balance of trade also improved in late 2016. Zandamela said that, in the final quarter of the year, for the first time in more than two decades, Mozambique ran a surplus on its trade balance, exporting 18.2 million dollars worth of goods more than it imported. This contrasts with a deficit of 904 million dollars in the same period of 2015.
This resulted from a sharp fall in imports in the last three months of 2016, plus a surge in exports, particularly from the foreign investment based mega-projects, helped by an increase in some key commodity prices. Thus, compared with 2015, the export revenues from coal and aluminium rose by 225 and 18 per cent respectively.
The annual trade deficit remained – but was 65 per cent lower than in 2015. Taking the year as a whole, both exports and imports declined, but the latter did so at a much faster rate.
Zandamela also announced that Mozambique’s net international reserves rose to 1.798 billion dollars in January – enough to cover five months’ imports of goods and non-factor services (excluding the mega-projects).
He denied that there was any lack of funds to import fuel, and confirmed that the lack of fuel, particularly petrol, reported in several cities over the past fortnight, was a logistical, not a financial problem.
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