Mozambique: Trade balance improves 14.2% in first half, but remains in negative territory

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Mozambique: Trade balance improves 14.2% in first half, but remains in negative territory

9:19 CAT | 02 Dec 2024

File photo: Lusa

Mozambique improved its trade balance deficit by 14.2% in the first half of the year, to US$1,305.8 million (€1,247 million), according to the central bank’s report on the balance of payments.

According to the Bank of Mozambique document seen Lusa on Friday, preliminary data indicate that the Mozambican economy “reduced the demand for external savings to finance its consumption and investment needs” by 12.5% in the first six months, with the combined balance of the current and capital accounts amounting to US$1,244.2 million (€1,188 million).

“This result reflects, on the one hand, the deceleration of the negative balance of the CC [Current Account], compared to the same period in 2023, of around 14%, to US$1,305.8 million, and, on the other, the annual decrease in the capital account surplus balance by around 39.0%,” reads the text.

It adds that the reduction in the CC deficit “essentially reflects the reduction recorded in the negative balance of the goods account by 39.1%, justified by the increase in exports by 3.2%, compared to the decrease in imports by 2.6%”.

“The contraction of the CC deficit also resulted from the decrease in the negative balance of the services account by 16.7%, to a total of US$325.2 million (€310.4 million), reflecting the decrease in demand of some services by residents, which are partially directed to meet the needs arising from the development of companies classified as Large Projects (GP), especially those that operate in the prospecting and exploration of natural gas”.

Furthermore, notes the central bank report, current net transfers recorded a surplus of US$497.6 million (€475 million), “an annual growth of 19.5% explained by the increase in private sector donations of around 22.1%”.

“In view of the above, economic transactions between Mozambique and the rest of the world resulted in a global surplus balance of US$112 million (€106.8 million), which contributed to an increase in the monetary authority’s reserve assets by US$112 million, with the balance of gross international reserves being fixed at US$3,705.4 million (€3,536.2 million),” it further reads.

However, according to the report, Mozambique’s net debt position vis-à-vis the outside world “worsened” by US$257.1 million (€245.3 million), in relation to the result of the first quarter of the year, with the balance rise to US$71,524.9 million (€68,247 million) at the end of June.

Source: Lusa