Bank of Mozambique cuts prime rate to 25.75%
The governor of the Bank of Mozambique, Rogério Zandamela, said yesterday during a press conference that the country had already passed the critical phase of its economic crisis.
“We are no longer managing the crisis, we have already passed this phase. From the monetary policy point of view, we are no longer in the throes of suffocation; we are managing a situation of normalcy,” the central bank governor explained.
Zandamela said that it was in March and April that the Bank of Mozambique transited from managing “that emergency situation”.
The main reasons behind Zandamela’s announcement are macroeconomic indicators such as inflation, which has been experiencing a relative deceleration in recent months; the recovery of the metical against the US dollar and the South African rand; and especially the increase in foreign currency reserves.
In the last two weeks alone, the Bank of Mozambique has added US$100 million to international reserves, and from January to May it bought more than US$600 million from credit institutions, making a total of more than US$2.342 billion, an amount capable of covering more than six months of imports of non-factorial products and services.
As to inflation, Mozambique experienced one of its highest rates ever last year, at 25.27 percent. It is still high, but the goal by the end of this year is that it should be around 14 percent. So far, the National Institute of Statistics (INE) has reported the price of several products, including food, having fallen.
INE figures indicate that inflation in Mozambique to May maintained its deceleration, at 5.09 percent, against 7.90 percent in the same period of 2016, resulting in an annual inflation figure of 20.45 percent. The Bank of Mozambique says that factors such as the appreciation of the metical, and reduction in fuel prices and food prices in South Africa all contributed to the decline.Source: O País