According to statistical reports from the Bank of Mozambique, which eased restrictive measures on these reserves in January, the volume of mandatory deposits had previously reached historic highs.
In December, these reserves amounted to 291.457 million meticais (€4.194 million), according to the central bank’s update.
The Bank of Mozambique had initially set the reserve requirements for commercial banks at 10.5% for national currency and 11% for foreign currency at the start of January 2023. However, in the first six months of 2023, the central bank raised the coefficient twice to “absorb the excessive liquidity in the banking system, which has the potential to generate inflationary pressure.”
The last of these increases occurred in June 2023, bringing the reserves to 39% of deposits in national currency and 39.5% for foreign currency to be held as bank reserves.
Since late December 2022, when they stood at 62.144 million meticais (€894 million), the volume of bank reserves held by the central bank rose by nearly 400%.
Facing a shortage of foreign exchange in the domestic market, Mozambican entrepreneurs have insisted in recent months on the need for the central bank to ease reserve requirements for foreign currency.
This decision was only made on January 27th this year, when the Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to cut the reserve requirements to 29% for national currency and 29.5% for foreign currency.
“Aiming to provide more liquidity to support the economy in restoring productive capacity and the supply of goods and services,” noted a statement from the CPMO meeting.
Meanwhile, the Governor of the Bank of Mozambique, Rogério Zandamela, stated on March 26th that liquidity in the financial system, particularly in foreign exchange, is sufficient following the decision to reduce the coefficients in January, with no plans for further adjustments at the moment.
“Currently, we are comfortable with the level of liquidity in the system; there is no need to touch structural liquidity by altering the reserve requirements. We will maintain them. It is not something to be taken lightly,” said the governor when questioned by journalists at the end of the latest CPMO meeting.
In this March meeting, the CPMO further cut the interest rate to 11.75% but left the reserve requirements unchanged, with Rogério Zandamela explaining that the measure adopted in the previous meeting “released a lot of liquidity.”
“To give an idea of the magnitude, all together, just in meticais, we are talking about at least 55 billion meticais (€798.2 million), and almost 250 million dollars (€231.8 million) in foreign currency were released for the normal functioning of the economy,” he pointed out.
