The Board of Directors of the Bank of Mozambique on Monday cut by 150 base points the compulsory reserves coefficient, the amount of money that the commercial banks must deposit with the central bank.
According to a release from the Bank of Mozambique, signed by its governor, Rogerio Zandamela, the coefficient is cut from 13 to 11.5 per cent for local currency, and from 36 to 34.5 per cent for foreign currency. This decision takes effect as from the start of the next period for constituting reserves, which begins on 7 April.
The purpose of this move, said Zandamela, is “to free up liquidity, so that the banking system may face, with greater resilience, the growing risks arising from the macro-economic impacts of COVID-19” (the respiratory disease caused by the new coronavirus first detected in the Chinese city of Wuhan).
The Board of Directors, the release added, “believes that the medium term prospects for inflation remain favourable, but the worsening of the risks from the COVID-19 pandemic, requires that the financial system be sufficiently prepared, with the necessary liquidity, to give a speedy response to possible negative effects.”
Meanwhile the travel disruption caused by COVID-19 has led the International Monetary Fund (IMF) to postpone the visit to Mozambique by a technical team that was originally scheduled for the second half of March.
This visit was to have discussed a possible new financial programme between Mozambique and the IMF. The IMF suspended the last programme in April 2016, when the true scale of the illicit lending by the previous government, under President Armando Guebuza, became public knowledge.
It transpired that the Guebuza government had, without the knowledge or consent of the Mozambican parliament, issued illegal guarantees for over two billion dollars of loans granted by the banks Credit Suisse and VTB of Russia to the three fraudulent, security-related companies Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management).
The IMF suspended its programme, and all the donors who had provided direct support to the Mozambican state budget, suspended all further disbursements, which plunged the country into financial crisis, and led to a sharp depreciation of the Mozambican currency, the metical.
Much of the Mozambican press has claimed that the IMF technical team would discuss the resumption of direct budget support. This is impossible for the simple reason that the IMF never gave direct support to the Mozambican state budget. However, a new programme between the government and the IMF would certainly be a condition for any western donor considering a return to direct budget support.
COVID-19 has also hit the Mozambican tourism industry, with potential tourists cancelling their reservations. Cited by the independent television station STV, the chairperson of the Tourism Association in the resort of Vilanculo, in the southern province of Inhambane, Yassin Amuji, said the cancellations began in early February, but in the past couple of days have become an avalanche.
Reservations made for the period between Easter to December have been cancelled, reducing the occupancy rate in Vilanculo hotels and lodges from 70 to between 10 and 20 per cent.
Tourists who have already paid want their money back, and since the cancellations were caused by a public health crisis, and not by the individual whims of tourists, Amuji thought the money would have to be returned.
“Since it’s a question of force majeure, the tourism operators must return the money”, he said. “But not all of them have the money, since they used it to invest in hotel services.”
Labour Minister Margarida Talapa on Monday declared that any worker displaying flu-like symptoms should stay away from work, but should not suffer any penalty for this.
Talapa said employers should not cut the wages of any of their workers who stay away because they have symptoms which could indicate coronavirus infection. The question of possible compensation for employers in this situation could be discussed at the meetings between the government, the trade unions and the employers’ associations.
Source: AIM via Club of Mozambique