The Bank of Mozambique states that measures to reduce toll prices, water fees, and the extension of VAT exemption on certain products may contribute to lowering the cost of living.
In a document on the economic outlook and inflation prospects, the Bank of Mozambique presents projections that indicate inflation will remain in single digits in the medium term, resulting from the combination of the following factors:
“The trend towards slowing prices of goods and services in the international market, the stability of the Metical, the VAT exemption on certain essential products, and the reduction of toll rates.”
According to the Bank of Mozambique, considerable risks and uncertainties remain, mainly of an internal nature, which pose challenges to maintaining this scenario, highlighting the impacts of the worsening fiscal situation, uncertainty regarding the speed of recovery of productive capacity and supply of goods and services, as well as the effects of climate shocks.
“Regarding economic activity, excluding the liquefied natural gas sector, moderate economic growth is expected, mainly reflecting the performance of the primary sector (agriculture and coal mining) and the tertiary sector (services), supported by the gradual restoration of productive and logistical capacity, despite uncertainties about the impacts of climate shocks on agricultural production and various infrastructures, as well as the effects of post-election tensions on economic sectors.”
In line with these trends, the Bank of Mozambique recently reduced the reference interest rate from 11.75% to 11%.
Source: O País
