Bank of Mozambique: Covid-19 measures released $81.2 million dollars to finance the economy

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Bank of Mozambique: Covid-19 measures released $81.2 million dollars to finance the economy

3:16 CAT | 19 Nov 2020

Picture: O País

The combination of measures advanced to deal with the impact of Covid-19 entailed the release of “six billion meticais (US$81.2 million) to finance the economy”, Bank of Mozambique governor Rogério Zandamela announced today.

Speaking at the opening of the 45th meeting of the Consultative Council of the Bank of Mozambique, being held in Chimoio, Manica province, until Friday, Governor Zandamela said that the combination of the military instability in the centre and north plus the effects of the pandemic had “devastating effects” on Mozambican economic activity.

“The year about to end was marked by a very complex political, economic, social, internal and international context, which made the fulfilment of our mission particularly challenging,” he added.

Poor performance and restrictions imposed to prevent the spread of the new coronavirus led Mozambique’s gross domestic product (GDP) to fall 3.25% in the second quarter, and exports to fall by US$400 million, obliging the central bank to take unprecedented monetary policy measures to save the economy by reducing financing costs for families and companies.

More than 2,500 companies have benefited from the renegotiation of loans from banks facilitated by the sector regulator, which lowered the deposit limit that banks are required to maintain in foreign currency with the Bank of Mozambique.

As a last resort to support imports, the central bank introduced a US$500 million foreign currency credit line from March to December, although with little take-up: so far only US$3.5 million has been solicited.

Governor Zandamela justified this weak adhesion by the fact that the market remains sufficiently supplied with foreign exchange for the current levels of demand for imports.

Despite the adverse context, the governor assessed the central bank’s performance under his own command positively, as contributing to macroeconomic stability and ensuring the stability of the financial system, in addition to promoting financial inclusion.

“Inflation below 5% was ensured, low enough and stable enough to protect the purchasing power of citizens, maintaining a comfortable level of international reserves,” and “the soundness and robustness of the banking system was consolidated,” he added.

The Bank of Mozambique also highlights the introduction of the single bank identification number, which will make the national payment system “modern, robust and secure”.

Source: Lusa