Bank of Mozambique penalized five financial institutions last year
According to Bank of Mozambique governor Rogério Zandamela, the existence of foreign financial groups contributes to increased competition and diversity and availability of financial products, and also to the development of the industry in terms of technology.
However, Zandamela also argues that greater supervision of foreign capital flows in the banking system is necessary, and that a discussion on cross-border supervision is therefore “inevitable”.
“In the Mozambican legal framework, cross-border supervision is in reality materialised in memoranda of understanding, participation in colleges of supervisors and joint inspections with other central banks,” Zandamela said at the opening of the fifth meeting of central bank supervisors of member states of the Community of Portuguese-Language Countries.
However, despite the “foreign invasion” of the Mozambican banking sector by foreign financial groups , Zandamela says that the financial system remains solid and robust, contributing about 6% to the country’s gross domestic product.
This robustness was due to a series of monetary policy reforms carried out by the Bank of Mozambique since 2017. These had brought inflation down dramatically, to below 5% in the last eight months of 2018; international reserves had recovered to about seven months of import coverage and the metical had stabilised against the US dollar at around 60 meticais.
As a result of monetary policy measures, the central bank governor said, the economy was increasingly diversified, although still below its real potential, with gross domestic product registering a growth rate of only 3.4% in the first six months of 2018.
The economic recovery follows a period of recession between 2014 and 2016 resulting from the ‘hidden debt’ scandal that precipitated the crisis.
By Edson Arante
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