Mozambique: International reserves guarantee four months of imports – central bank

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Mozambique: International reserves guarantee four months of imports – central bank

2:26 CAT | 28 Sep 2023

File photo: Lusa

Mozambique currently has international reserves of US$3.220 billion, which guarantee the equivalent of four months of estimated imports of goods and services for this year, according to the central bank.

“The country’s international reserves remain at satisfactory levels. The country’s external position, measured by gross international reserves, remains satisfactory,” reads a report by the Bank of Mozambique, to which Lusa had access on Thursday.

The document adds that by 15 September Mozambique had “an accumulated balance” of US$3.220 billion (€3.065 billion), “sufficient to cover around four months of imports of goods and services, excluding major projects”.

In the 2023 state budget, the Mozambican government set the goal of building up net international reserves of US$2.936 billion (€2.686 billion), “corresponding to three months’ worth of imports of non-factorial goods and services”.

Mozambique’s international reserves have been falling since 2021, the International Monetary Fund (IMF) 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,” says an IMF report on the final approval of the review of the Extended Credit Facility (ECF) for Mozambique.

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

The IMF recognises 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 notes.

Last January, the Bank of Mozambique increased the ratio of mandatory reserves to foreign demand deposits from 11.5% to 28%, and in April it reduced the supply to fuel importers from 100% to 60%, the IMF recalls in the report released today.

Source: Lusa