Mozambique: Net international reserves increased by 5% in January

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Mozambique: Net international reserves increased by 5% in January

3:08 CAT | 06 Mar 2024

File photo: Lusa

Mozambique’s Net International Reserves (NIR) – necessary for imports of goods and services – in January increased by 5% to US$3,589 million (€3,308 million), driven by bank provisioning, according to official data.

According to a statistical report from the Bank of Mozambique, to which Lusa had access this Wednesday, these foreign currency reserves stood at almost US$3,422 million by the end of December. The growth during January was influenced by almost US$300 million dollars in bank provisioning, around 75% of all inflows.

In the opposite direction, of the US$283 million in foreign currency reserve outflows in January, US$199.3 million were transfers made by banks, and US$22.8 million related to the payment of Mozambican debt service, among others.

Mozambique ended the month of January with enough foreign exchange reserves to cover 3.1 months of import needs expected for the entire year (3.5 months in December), a coverage that increases to 4.9 months “excluding large projects” (4.3 months in December), according to the Bank of Mozambique.

Mozambique’s international reserves had been falling since 2021, the International Monetary Fund (IMF) had announced in July.

“Gross international reserves cover almost 4.3 months of imports [end-2022], which is above the commonly recommended minimum buffer” of “at least three months”, an IMF report on the final approval of the review of the Extended Credit Facility (ECF) for Mozambique noted.

The IMF report added that Mozambique’s international reserves had been “falling since the beginning of 2021” and had reached US$2.9 billion (€2.580 billion) at the end of last year.

The IMF acknowledged the impact of the “high costs” of fuel imports on Mozambique’s international reserves, given the supply of foreign currency to the main fuel importers.

“At the same time, imports not related to megaprojects have increased significantly in the last two years, further reducing the import coverage of reserves,” the document detailed.

Source: Lusa