Mozambique’s Net International Reserves grew in December to $3.740 billion, recovering from previous declines. This increase is the highest since September, with the reserves deemed essential for the country’s economic stability. The Bank of Mozambique has also adjusted reserve requirements to stimulate liquidity and support the economy.
In December, Mozambique experienced a resurgence in its Net International Reserves (NIR), reaching $3.740 billion (€3.453 billion), the highest level since September. This growth follows two consecutive months of decline in foreign currency reserves, which had previously dropped to €3.682 billion (€3.400 billion) in October and November, before improving by 1.5% in December.
At the end of September, NIR stood at $3.762 billion (€3.474 billion), covering approximately three months of the nation’s import requirements. By January 2024, these reserves had climbed to nearly €3.601 billion (€3.325 billion), marking the largest figure since September 2021. Furthermore, July recorded €3.807 billion (€3.515 billion), a peak level observed in three years.
Rogério Zandamela, the governor of the Bank of Mozambique, emphasized the importance of maintaining foreign currency reserves, stating, “We won’t burn reserves and we’re not burning reserves.” He highlighted that these reserves are essential for the functioning of the country and its institutions amidst forecasts regarding Mozambique’s medium-term economic prospects.
In light of domestic currency shortages, local businesses have advocated for the central bank to lower mandatory reserve coefficients. These coefficients required banks to deposit 39.5% of their foreign currency holdings, a significant increase from only 11.5% in 2022. Following this, on January 27, the Monetary Policy Committee of the Bank of Mozambique reduced mandatory reserve levels for both national and foreign currency to 29% to enhance liquidity and support economic recovery, restoring productive capacity and supply of goods and services.
The recent increase in Mozambique’s Net International Reserves signifies a positive shift in its economic landscape after a period of decline. The emphasis on maintaining these reserves is essential for sustaining international trade and stability. Additionally, the adjustments in mandatory reserve coefficients aim to enhance liquidity for businesses, facilitating an improved economic environment.
Original Source: clubofmozambique.com
