The compulsory reserves of Mozambican commercial banks reached an all-time high of 268.4 billion meticals (4.2 billion dollars) in September, an increase of 13% over the same period last year, according to official data from the BoM (Bank of Mozambique), as reported by Lusa.
According to the BoM’s statistical reports, this amount reflects the continuous increase in reserves over the last year and a half, a period which has seen consecutive record highs. In September 2023, reserves totalled 237.1 billion meticals.
At the beginning of January 2023, the mandatory reserve ratio was set at 10.5 per cent for deposits in national currency and 11 per cent for deposits in foreign currency. However, over the course of the first half of the year, the BoM increased the coefficient twice, with the aim of ‘absorbing excessive liquidity in the banking system, with the potential to generate inflationary pressure’.
The last of these increases took place in June 2023, when the coefficients were raised to 39 per cent of deposits in national currency and 39.5 per cent of deposits in foreign currency. As a result, reserves have seen an accumulated growth of more than 332 per cent since December 2022, when they totalled 62.1 billion meticals.
On 30 September 2024, the BoM decided to keep the coefficients at the maximum values, at least until 27 November, the date of the next Monetary Policy Committee (CPMO) meeting. This decision stands despite calls from the International Monetary Fund (IMF) and the Mozambican business sector to reduce them.
The IMF, in its fourth assessment of the Extended Credit Facility programme, concluded in July, stressed that the significant increases in the reserve requirements in 2023, from around 10% to 40%, ‘may have been greater than necessary to absorb excess liquidity’.
The organisation believes that reducing the ratios is essential to alleviate financial conditions and suggests alternatives, such as remunerating the mandatory reserves.
For their part, Mozambican businesspeople, represented by the Confederation of Economic Associations (CTA), pointed to difficulties arising from the current policy, including a lack of foreign currency on the market, delays in payments abroad and fines for non-compliance.
‘The lack of foreign currency on the market has constrained the process of paying invoices abroad,’ said CTA vice-president Zuneid Calumia in July, calling on the BoM to review the coefficients.
Despite the criticism, the BoM reiterated that the current policy aims to ensure the stability of the financial system and control inflationary pressures. The decision on possible adjustments to the coefficients will be taken at the next CPMO meeting, scheduled for the end of November.
