According to the 2023 Annual Report of the Bank of Mozambique (BoM), inflation in the country slowed significantly during the year, closing at 5.3 per cent, a substantial reduction on the 10.9 per cent seen in 2022. According to the report, this decline reflects the impact of a restrictive monetary policy, combined with stability in international food and fuel prices.
The BoM pointed out that maintaining the monetary policy interest rate, the MIMO rate, at 17.25 per cent was a strategic decision by the Monetary Policy Committee to contain liquidity in the market and avoid additional inflationary pressures.
In addition, the central bank increased the mandatory reserve coefficients for domestic and foreign currency liabilities to 39.0 per cent and 39.5 per cent respectively throughout 2023.
‘These measures, combined with a favourable international climate, were crucial in keeping inflation within single digits,’ the report explains.
On the international front, the BoM emphasised that the reduction in global food and fuel prices had a positive effect in Mozambique, facilitating the fall in domestic inflation. The increased availability of fruit and vegetables on the domestic market also contributed to moderating the prices of these products, helping to contain the rise in the general price index.
Even so, the Bank of Mozambique warns of challenges on the horizon, namely the possibility of new climate shocks and the impact of geopolitical conflicts on commodity prices.
For 2024, the institution anticipates the continuation of a prudent policy aimed at ensuring price stability and mitigating inflationary risks arising from external pressures.
According to the BoM, the 2023 performance reflects the effect of the monetary strategies adopted, consolidating the convergence of inflation to controlled levels in line with medium-term objectives.
Felizberto Ruco
