IMF arrives but without $; interest rates up; MT down 11% in month – Hanlon

Login

Register

http://www.clubofmozambique.com/

IMF arrives but without $; interest rates up; MT down 11% in month – Hanlon

12:36 CAT | 21 Jun 2016

An IMF team arrived in Maputo Thursday 16 June and will remain until Friday 24 June. The purpose of the mission is “to continue the fact-finding process linked to the previously undisclosed borrowing and to assess the macroeconomic situation. That will be the objective of that mission. So, it will not be discussing at this point further financial support. First of all, it’s the fact-finding and the assessment,” said IMF spokesman Gerry Rice at a press conference in Washington on 16 June.

Interest rates were raised again last week. The base rate, that Standing Lending Facility rate paid by commercial banks to borrow from the central bank, was raised 1.5% to 14.25%, the Bank of Mozambique (BdM) announced on 13 June. This is the sixth rise since October, when the rate was 7.5%. The rate paid to commercial banks for money deposited with the central bank, the Standing Deposit Facility, was also raised by 1.5% to 7.25%. A change in reserve requirements announced in April took effect on 7 June – commercial banks must deposit with the central bank 15% of the deposits (passivos) they hold in foreign currency, an increase in the previous 10.5%, and a welcome influx of perhaps $70 mn US dollars. For Meticais, the reserve requirement remains 10.5% of deposits.

Reserves down: BdM also announced on 13 June the continued fall of reserves. At the end of May, foreign currency reserves were $1.71 bn, equivalent to 3.1 months of imports (not including the mega-projects), compared to 3.7 months at the end of March.

Devaluation continues. In the past month (18 May to 18 June) the Metical has devalued 11% against the US$ and 15% against the Rand. The current bank rate (www.oanda.com) is $1 = MT 60.64 compared to $1 = Mt 54.81 a month ago, and Rand 1 = Mt 4.00 compared to Rand 1 = Mt 3.48 a month ago. (Five months ago, in mid January, the rates were $1 = Mt 45.25 and Rand 1 = 2.69, giving devaluations since then of 34% and 49%.)

Source: News reports & clippings