Mozambique: State Institute denies misuse of €24.2M funds earmarked for Covid fight
File photo: Lusa
The Monetary Policy Committee of the Bank of Mozambique (CPMO), meeting in Maputo on Wednesday, decided to keep its key interest rate unchanged at 13.25 per cent.
The Interbank Money Market Rate (MIMO), used by the central bank for its interventions on the interbank money market to regulate liquidity, has remained at 13.25 per cent, after it was raised by 300 percentage points in late January.
The CPMO announced that the decision not to alter interest rates “is sustained by the maintenance of prospects for single digit annual inflation (i.e. less than ten per cent), despite a high level of risks and uncertainties, particularly those arising from increased food and fuel prices as well as constraints in the international supply chain”.
Uncertainties also arose from the Covid-19 pandemic, since the scale of its impact on the Mozambican economy remained unclear. Internationally there were also doubts as to the evolution of the pandemic, and how long the restrictions in the global supply chain might last, “which are resulting in high transport costs and delays in the delivery of merchandise”.
The CPMO believed the country remain on target for single digit inflation. Annual inflation was six per cent in September, but rose to 6.4 per cent in October, blamed on the recent increases in food and fuel prices.
Despite the likelihood of further rises in the price of oil on the world market, and of increased transport fares domestically, the CPMO was optimistic that inflation over the short and medium term will remain low.
Mozambique’s gross domestic product grew by 3.4 per cent in the third quarter of 2021, said the CPMO release. This growth was “supported by the expansion of all sectors of economic activity”.
The CPMO forecasts “continued growth in economic activity, driven by foreign demand and by the implementation of the gas projects in the Rovuma Basin”.
But it warned that “the return to sustainable economic growth will continue to demand the deepening of structural reforms in the economy, seeking to strengthen institutions, improve the business environment, attract investment and create jobs”.
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