The mandatory reserves that commercial banks in Mozambique must hold at the Bank of Mozambique dropped by 28% in the first quarter of the year, falling to 209.9 billion meticais (USD 3.18 billion), according to data compiled this Tuesday, May 27, by Lusa based on statistical reports from the central bank.
According to the source, the significant decline followed the decision by the Monetary Policy Committee (CPMO) in January to ease the reserve requirement ratios—a move aimed at freeing up liquidity and stimulating economic activity. Previously, reserve levels had reached historic highs, peaking at the end of December 2023, when they totaled 291.4 billion meticais (USD 4.4 billion).
The upward trend in mandatory reserves began in late 2022, when they stood at 62.1 billion meticais (USD 941 million). In the months that followed, and throughout the first half of 2023, the Bank of Mozambique tightened monetary policy, increasing the reserve requirement ratios twice—eventually reaching 39% for deposits in local currency and 39.5% for foreign currency. These measures aimed to absorb excess liquidity in the banking system and curb inflationary pressures.
However, the strict reserve policy drew criticism from business leaders and economic operators, who warned of foreign currency shortages in the domestic market and called for greater flexibility from the central bank.
The relief came on January 27, 2024, when the CPMO decided to reduce the reserve ratios to 29% (local currency) and 29.5% (foreign currency), aiming to “make more liquidity available to support the economy’s recovery of productive capacity and the supply of goods and services.”
The Governor of the Bank of Mozambique, Rogério Zandamela, confirmed in March that the measure had led to a substantial release of funds:
“Just in meticais, we’re talking about at least 55 billion meticais, and almost USD 250 million in foreign currency that were injected into the economy,” he said during a recent CPMO meeting.
Despite the improved liquidity levels, especially in foreign currency, Zandamela ruled out further cuts to reserve requirement ratios for now, stressing the need for caution:
“At this point, we’re comfortable with the liquidity level in the system. There’s no need to touch structural liquidity. Reserve ratios are not something to play around with.”
In the same March meeting, the CPMO reduced the benchmark interest rate to 11.75%, but kept the reserve ratios unchanged, reaffirming confidence in the impact of the measures already implemented.
The next meeting of the Monetary Policy Committee is scheduled for this Wednesday, May 28, when a new assessment of the macroeconomic outlook is expected, along with potential adjustments to monetary policy, in a context still marked by challenges around inflation, currency management, and economic recovery.
Source: Diário Económico
