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Money in Circulation in Mozambique Hits Multi-Month Low

Money in Circulation in Mozambique Hits Multi-Month Low

Physical money circulating in Mozambique fell in February for the second time in a row, to 55.798 million meticals (818 million euros), a low for several months, according to data from an official report compiled today by Lusa.

Notes and coins in circulation in the country at the end of January totalled 57,061 million meticals (836 million euros) and the previous month 62,494 million meticals (916 million euros), according to a statistical report from the Bank of Mozambique.

Withdrawing money from circulation is a usual practice of contractionary monetary policy, reducing the money supply, normally used by central banks to contain price rises. However, during this period, several problems were reported in the new Mozambican interbank system, whose migration began in 2023, with recurring difficulties in payments and cash withdrawals at ATMs.

In the space of a month, Mozambique lost 1,264 million meticals (18.5 million euros) from circulation, dropping to the lowest value in at least seven months.

Mozambique recorded year-on-year inflation of 3 per cent in March, compared to the same month in 2023, a new consecutive monthly drop, said the country’s National Statistics Institute (INE).

INE’s Consumer Price Index (CPI) data indicates that Mozambique “recorded a rise in the general price level of around 3.03 per cent” over 12 months, compared to March 2023, and that the divisions of Education, Restaurants, hotels, cafés and similar, and Food and non-alcoholic beverages “were the ones with the highest price rises, varying by 10.39 per cent, 5.93 per cent and 4.94 per cent, respectively”.

Year-on-year inflation in February (12 months) was 4%, in January 4.19% and in December 5.3%.

The CPI report added that the country saw prices rise by 0.03 per cent in the space of a month, compared to 0.47 per cent in February, 0.93 per cent in January and 1.29 per cent in December.

“The clothing and footwear division stood out, contributing around 0.04 percentage points to the total monthly change [in March],” it said.

Mozambique ended 2023 with 12-month year-on-year inflation of 5.30 per cent and a one-year average of 7.1 per cent, according to previous INE data, when the official government forecast was 7 per cent.

In December, Mozambique’s Minister of Economy and Finance, Max Tonela, said that the country’s economy would have grown by 2023 by the equivalent of 5 per cent of GDP (gross domestic product) and that it could reach 5.5 per cent this year.

Inflation, according to government forecasts, was expected to stand at 7 per cent last year, repeating the same figure in 2024.

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