Mozambique’s Net International Reserves (NIR) fell again at the end of the first half of the year, to $3.209 billion (€2.935 billion), according to figures from the ministry of economy and finance.
According to the report on the implementation of the Economic and Social Plan and the state budget from 1 January to 30 June, these reserves guarantee three months of imports of goods and services, excluding imports from major projects, compared to the five months they guaranteed in the same period in 2022.
In the 2023 state budget, the Mozambican government set the goal of building up Net International Reserves of $2.93 billion (€2.68 billion), “corresponding to three months’ coverage of imports of non-factorial goods and services”.
Mozambique’s international reserves have been falling since 2021, the International Monetary Fund (IMF) announced in July.
“Gross international reserves cover almost 4.3 months of imports [end-2022], which is above the commonly recommended minimum buffer” of “at least three months,” says an IMF report on the final approval of the review of the Extended Credit Facility (ECF) for Mozambique.
It adds that Mozambique’s international reserves have been “falling since the beginning of 2021” and reached $2.9 billion (€2.58 billion) at the end of last year.
The IMF recognises the impact of the “high costs” of fuel imports on Mozambique’s international reserves, given the supply of foreign currency to the main fuel importers.
“At the same time, imports not related to megaprojects have increased significantly in the last two years, further reducing the import coverage of reserves,” the document notes.
Last January, the Bank of Mozambique increased the ratio of mandatory reserves to foreign demand deposits from 11.5% to 28%, and in April, it reduced the supply to fuel importers from 100% to 60%, the IMF recalled in the report released on Friday.
The announcement of the IMF’s approval of this revision to the ECF was made on 6 July, guaranteeing a disbursement of $60.6 million (€54 million) to Mozambique, confirmed today in the institution’s report.
The note that accompanied the announcement of the second review of the programme approved in May 2022 and which brings the total amount already received by Mozambique to $212.09 million (€194 million), out of a total of $456 million (€418 million), said that it allowed two criteria to be overlooked: the primary budget balance at the end of last year and the accumulation of external debts by the public sector.
In its macroeconomic forecasts for this year, the IMF admits that Mozambique’s Gross Domestic Product (GDP) growth will accelerate from 4.2% in 2022 to 7% this year, anticipating that by the end of the year, inflation will have fallen from 10.3% to 6.7%, the same as in 2021, but still almost double the previous two years.
The debt-to-GDP ratio is expected to continue its downward trajectory and reach 89.7% by the end of this year, an improvement on last year’s 95.5% of GDP.
Lusa
