Mozambique: No Change in Central Bank Interest Rates

The Bank of Mozambique has decided to maintain key interest rates over the next month.

A statement from the Bank’s Monetary Policy Committee on Friday said that the Standing Lending Facility (the interest rate paid by the commercial banks to the central bank for money borrowed on the Interbank Money Market) will remain at 12.75 per cent.

The Standing Deposit Facility (the rate paid by the central bank to the commercial banks on money they deposit with it) will remain at 5.75 per cent.

The Monetary Policy Committee also noted that there has been a sharp increase in inflation. According to the National Statistics Institute (INE), which bases its inflation figures on the consumer price indices of the three largest cities (Maputo, Nampula, and Beira), inflation in April was 2.23 per cent. In March the figure was 1.33 per cent.

The Committee highlighted the inflationary pressure caused by political and military tensions limiting the movement of goods and services, the depreciation of the metical against the currencies of the country’s major trading partners, and the shortage of agricultural products resulting from the floods and persistent drought that has hit the country.

In addition, it noted that for the second month in a row business confidence has fallen due to “an unfavourable outlook for demand and prices”.

The Central Bank noted that the metical has continued to depreciate against the dollar. On the last day of April the US dollar was quoted on the Inter-Bank Exchange Market at 53.21 meticais, compared with 50.55 meticais at the end of March. The South African rand was quoted at 3.76 meticais, compared with 3.44 meticais a month earlier.

Provisional data shows that at the end of April the country’s net foreign reserves stood at 1.76 billion dollars, a fall of 67.2 million dollars over the month. The reserves are enough to cover 3.2 months of imports of goods and non-factor services, when the operations of the foreign exchange mega-projects are excluded.

Source: Agencia de Informacao de Mocambique