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BoM: Mozambique Reduces Dependence on Foreign Financing in 2023

BoM: Mozambique Reduces Dependence on Foreign Financing in 2023

The national economy showed a notable reduction in its dependence on external savings to finance its consumption and investment needs in 2023, with a 72.3 per cent drop in net external financing needs. The current and capital account balance, which reflects domestic absorption, fell significantly to 113 billion meticals (1.7 billion dollars), according to information from the Lusa news agency.

According to preliminary data from the Bank of Mozambique’s report on the Balance of Payments for 2023, cited by the agency, this indicator, expressed as a percentage of Gross Domestic Product (GDP), fell sharply, dropping from 35 per cent in 2022 to 8.6 per cent in 2023. This result is mainly due to the 67.7 per cent contraction in the current account deficit, which stood at around 141 billion meticals (2.2 billion dollars), corresponding to 10.8 per cent of GDP.

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The report also details that ‘the reduction in the current account deficit was fundamentally influenced by the 82.1 per cent reduction in the negative balance of the goods account. This improvement resulted mainly from the 76% reduction in imports of goods made by companies categorised as large projects, totalling 83.2 billion meticals (1.3 billion dollars).’

In addition, the deficit in the services account was reduced by 46.4 per cent to approximately 50 billion meticals (786.5 million dollars), which represents 3.8 per cent of GDP. ‘This result reflects the more than 100 per cent increase in net transport revenues and the decrease in the contracting of technical assistance services, mainly for major projects,’ the document states.

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On the other hand, net current transfers ‘showed a significant surplus of almost 83.6 billion meticals (1.3 billion dollars), an increase of 22.4 per cent compared to 2022. This increase was justified by the increase in net receipts from the private sector.’

The Bank of Mozambique emphasises that ‘the improvement in the balance of payments is a positive indicator for the country’s economic stability, reducing the need for external resources to finance domestic activities and strengthening the national economy in the face of global challenges’.

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