The mandatory reserves of Mozambican banks rose in August to 221.005 million meticais (2.980 million euros) compared to the previous month, despite a 24% decrease this year, according to official data.
The historical data from the latest statistical reports of the Bank of Mozambique show these mandatory reserves at the central bank compared with the December record of 291.457 million meticais (3.930 million euros), right before easing these restrictions.
In June, the reserves amounted to 212.798 million meticais (2.868 million euros), increased to 213.313 million meticais (2.875 million euros) in July, and further accelerated by 3.6% in August.
The required reserves for commercial banks were set by the Bank of Mozambique at a rate of 10.5% in domestic currency and 11% in foreign currency at the beginning of January 2023. In the first half of that year, the ratios were raised twice to “absorb excessive liquidity in the banking system, which has the potential to generate inflationary pressure.”
The last of these increases occurred in June 2023, reaching 39% of deposits in domestic currency and 39.5% in foreign currency held in reserve.
Since the end of December 2022, when they stood at 62.144 million meticais (834 million euros), the volume of banking reserves with the central bank has increased nearly 400% by the end of 2024.
Due to the lack of foreign currency in the domestic market, Mozambican entrepreneurs have been urging the central bank in recent months to ease the foreign currency reserve requirements.
This decision emerged only on January 27 this year when the Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to reduce the reserve requirement ratios to 29% for domestic currency and 29.5% for foreign currency.
“Aiming to provide more liquidity to support the economy in restoring production capacity and the supply of goods and services,” stated the CPMO meeting’s communiqué.
The governor of the Bank of Mozambique, Rogério Zandamela, stated on March 26 that liquidity in the financial system, particularly in foreign currency, is sufficient following the reduction decided in January, with no plans to repeat this, which indeed has not occurred in the three subsequent CPMO meetings held every two months.
“At this moment, we are comfortable with the level of liquidity in the system; there is no need to affect structural liquidity by altering the mandatory reserves. We will maintain it. It’s not something to be tampered with, regarding the rates,” the governor said when questioned by journalists at the end of the last CPMO meeting.
