Mozambique: Foreign reserves not to be ‘wasted’ – central bank

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Mozambique: Foreign reserves not to be ‘wasted’ – central bank

4:29 CAT | 08 Nov 2024

File photo: Lusa

The governor of the Bank of Mozambique said on Friday that the country’s foreign currency reserves are “comfortable”, currently covering the needs of five months of imports of goods and services, and assured that they are not to be “wasted”.

“We’re not wasting reserves. They are still there to allow the normal functioning of our country and our institutions,” said the governor, Rogério Zandamela, during the 49th consultative council of the Bank of Mozambique, which is taking place in Maputo, while outlining the economic outlook for the country in the medium term.

“We also expect our reserves, which I said today are over five months in terms of import coverage, to remain at comfortable levels,” he said.

Mozambican businesspeople have insisted on the need for the central bank to ease the mandatory foreign currency reserve coefficients. Given the lack of foreign currency on the domestic market, banks currently obliged to deposit 39.5% of the total with the central bank, compared to 11.5% in 2022.

In his assessment of the country’s macroeconomic and financial performance, Zandamela recalled that in the second quarter of 2024, the Gross Domestic Product “expanded by 4.5%, based essentially on the performance of the extractive industry”.

“Annual inflation continued its downward trend, standing at 2.5% last September, the last figure recorded, after 5% in December 2023. We’re talking about low inflation. I’d say very low, from a historical point of view,” he said.

Rogério Zandamela also highlighted “a 14% improvement in the current account deficit in the first half of this year” and said that the banking sector “remains solid, well capitalised, well liquid and with high levels of profitability, recording solvency ratios of almost 26% and liquidity ratios of 49%”.

According to the governor, they are “both above regulatory levels”, almost double those levels, which is “good news”.

Source: Lusa