The country’s economic week was marked by progress in the fight against money laundering, a slight rise in inflation and the continued issuance of Treasury Bonds. These events reflect both the challenges and the signs of recovery in the Mozambican economy. Below are the main events.
Mozambique Makes Progress Towards Leaving FATF’s ‘Grey List
Mozambique has taken another important step in its attempt to get off the “Grey List ’ of the Financial Action Task Force (FATF), which monitors compliance with anti-money laundering and anti-terrorist financing standards.
The fifth progress report, released this week, emphasises that the country has shown a ‘strong commitment’ to fulfilling its action plan, with notable advances, especially in risk-based supervision and in strengthening the Financial Intelligence Unit (FIU).
However, the FATF warns that there are still six activities to be finalised.
A new report will be submitted in November, when the country hopes to consolidate this progress. Mozambique was included on the ‘Grey List’ in October 2022, due to deficiencies identified in the anti-money laundering system.
Inflation rises slightly in September
Inflation in Mozambique rose again in September, breaking a cycle of four consecutive months of deflation. According to the National Statistics Institute (INE), the Consumer Price Index (CPI) rose by 0.16 per cent, with the greatest pressure on prices coming from the food and non-alcoholic drinks sector, which accounted for 0.09 percentage points of the increase.
Year-on-year inflation slowed to 2.45%, down from 2.75% in August. This downward trend has been observed since April, when year-on-year inflation was 3.26 per cent. Despite the slight monthly increase, the INE did not issue any new forecasts for the following months, and uncertainties remain as to the future trajectory of prices.
Economy expected to recover gradually, according to BoM
The Bank of Mozambique (BoM) maintains a gradual recovery outlook for the economy, despite recognising a slowdown in growth in the first half of 2024. According to the economic outlook report, Gross Domestic Product (GDP) grew by 3.9 per cent in the first six months of this year, compared to 6.2 per cent in the same period of 2023. The recovery is sustained by the mining industry and the trade and services sectors.
The report also indicates that the Industrial Production Index (PMI) has been signalling an improvement in economic conditions since May, remaining above 50 points in August. For 2024, the government projects growth of 5.5 per cent, with GDP estimated to reach 1.536 trillion by the end of the year.
State Places 5.7 Billion Meticals in Treasury Bonds
The week was also marked by the state issuing 5.7 billion meticals (88.4 million dollars) in Treasury Bonds. This was the 11th series of bonds issued this year, with a fixed nominal interest rate of 14.70 per cent. The demand-to-supply ratio was 89.54 per cent, resulting in the total amount available for subscription being placed.
The issue is part of a strategy to manage the high level of domestic debt, which increased to 402.7 billion meticals (6.2 billion dollars) this year, according to the BoM. Despite this pressure, the central bank assured that international reserves remain at comfortable levels, capable of covering more than five months of imports of goods and services.
Felisberto Ruco
