The governor of the central bank expressed confidence in the current level of liquidity within the banking system, stating there is no need to adjust structural liquidity by altering reserve requirements. Addressing journalists at the conclusion of the Monetary Policy Committee (CPMO) meeting, he emphasized, “We must maintain our approach as this is not something to take lightly, especially concerning reserve requirements.”
On January 27, the CPMO announced a reduction in the MIMO benchmark interest rate, decreasing it from 12.75%, a rate active since late November, to 12.25%. This move was accompanied by a reduction in the reserve requirement ratios, with national currency reserves lowered from 39.0% to 29.0% and foreign currency reserves from 39.50% to 29.50%. The adjustments aimed to inject additional liquidity to bolster economic recovery and the provision of goods and services.
In the latest meeting, the CPMO further reduced the interest rate to 11.75%, while keeping reserve requirement ratios constant. Rogério Zandamela explained that the previous changes had already “released significant liquidity.”
To illustrate the impact, he mentioned that, in local currency alone, approximately 55 billion meticais (equivalent to 798.2 million euros) and nearly 250 million dollars (231.8 million euros) in foreign currency had been freed, supporting the normal functioning of the economy.
Mozambican businesses have recently urged the central bank to ease foreign currency reserve requirements due to a shortage of foreign exchange in the domestic market.
Reports indicated that in December, Mozambican banks’ reserve requirements reached a historic high of 307.847 million meticais (equivalent to 4.441 billion euros), a 15% rise year-on-year. This data, provided by the central bank, comes as recent restrictions on these reserves were relaxed.
According to the Bank of Mozambique’s statistical reports, these mandated deposits set by the banking sector saw consecutive monthly increases over the past year and a half.
By September 2023, these reserves had increased to 237.092 million meticais (3.420 billion euros), with more than a 9% hike occurring between November and December 2024 alone.
The Bank of Mozambique had initially set the reserve requirement ratios at 10.5% for local currency and 11% for foreign currency at the beginning of January 2023.
However, during the first half of 2023, the central bank raised these ratios twice to “absorb excess liquidity within the banking system, which could potentially lead to inflationary pressure.”
The latest increase in June 2023 saw reserve requirements rise to 39% for deposits in local currency and 39.5% for those in foreign currency.
Since the end of December 2022, when reserve volumes stood at 62.144 million meticais (896 million euros), they have surged by nearly 400%, held in central bank vaults.
