Mozambique: Economy reduced demand for external financing in 2023

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Mozambique: Economy reduced demand for external financing in 2023

5:32 CAT | 11 May 2024

File photo: Lusa

The Mozambican economy reduced demand for external reserves to finance consumption and financing needs by 72.3% in 2023, with the current and capital account balance falling, according to official data consulted on Thursday by Lusa.

According to preliminary data from the Bank of Mozambique’s report on the Balance of Payments for 2023, this balance, which reflects domestic absorption, fell to US$1.782 billion (€1.655 billion). Net external financing needs are measured by the combined current and capital account balance and, according to the central bank, this indicator as a percentage of Gross Domestic Product (GDP) fell by 26.4 %, from 35% in 2022 to 8.6% in 2023.

“The contraction of the current account deficit by 67.7 % contributed essentially to this result,” standing at US$2.224 billion (€2.066 billion), equivalent to 10.8 % of GDP.

The report also states that the reduction in the current account deficit “fundamentally reflects the 82.1 % decrease in the negative balance of the goods account, justified by the 76% decrease in imports of goods by companies belonging to the large projects category compared to 2022,” standing at US$1.307.2 billion (€1.214 billion).

The improvement in the current account deficit also resulted from “the reduction in the balance of the services account by 46.4%,” to a total of US$786.5 million (€731 million), equivalent to 3.8% of GDP, “reflecting, on the one hand, the increase in net transport receipts of more than 100% and, on the other, the decrease in the contracting of technical assistance services, especially by major projects.”

“Furthermore, net current transfers recorded a surplus” of almost US$1.303 billion (€1.211 billion), 22.4% more than in 2022, “justified by the increase in net receipts from the private sector”.

Source: Lusa