Economy Finance Government Mozambique

Bank of Mozambique introduces measures to offset devaluation of the metical

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The Bank of Mozambique is implementing measures to cushion the effects of the devaluation of the metical in recent months and the expected rise in the inflation rate, said the central bank’s spokesman.

Waldemar de Sousa, on the sidelines of a meeting with the Confederation of Economic Associations of Mozambique (CTA), which brings together Mozambican employers, recalled that to cushion the negative effects of the current economic climate the central bank had increased interest rates.

The Bank of Mozambique also raised the reserve requirements, or the amount of capital that commercial banks are required to deposit with the central bank, the spokesman said cited by Portuguese news agency Lusa.

“Measures are underway in order to effect greater absorption of liquidity to ensure macroeconomic and financial sector stability in 2016, similar to what is being done for 2015, despite an adverse international climate,” said Sousa.

The “Economic Situation and Inflation Outlook” report published last week by the Bank of Mozambique showed that the country’s currency had been in sharp decline in recent months, inflation may exceed 5 percent in 2016 and GDP will grow only 6.3 percent against the initial forecast of 7.5 percent.

The Mozambican central bank attributed the worsening of macroeconomic indicators of Mozambique to strengthening of the dollar, falling prices of raw materials and a slowdown in the extractive industry, driven by the fact that the projects in the sector are entering the development phase, after a period of prospecting, particularly for natural gas.

Source: MacauHub

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