The Government of Mozambique’s State Budget proposal, which started being discussed in parliament yesterday, forecasts that the Mozambican currency will register an average annual exchange rate of 69 meticais per US dollar in 2021.
The national currency has continued to depreciate and is currently traded at between 73 to 75 meticais per U.S. dollar, the reference currency for calculating the metical exchange rate with the other currencies.
The average annual rate in 2018 was 62.6 meticais per dollar.
“At the level of the foreign exchange market, interventions by the monetary authority will take into account the need to ensure an adequate level of gross international reserves to cover at least six months of imports of goods and services,” the 2021 State Budget proposal states.
Any measures will also aim to “limit excessive exchange rate volatility in relation to the main currencies with which the country transacts” goods and services.
Also read: Metical, Mozambique’s currency, turns 40
In any case, the depreciation of the metical is a given in the calculation of inflation.
“The acceleration of one percentage point – from 4% of inflation forecast for 2020 to 5% in 2021 – essentially reflects the impact of the depreciation of the metical and the upward revision of the price of oil in the international market,” the document adds.
The State Budget for 2021 also forecasts GDP growth of 2.1% compared to the forecast of 0.8% for this year, and a 2.5% rise in the value of exports to US$3.768M (€3.148M).
Regarding the balance of payments for 2021, the deficit in the partial goods account is expected to widen to U$3,150M (€2,631M), which reflects “the combined effect of the increase in imports of large projects [gas exploration of the Rovuma] and the economy in general, taking into account the expected recovery in economic activity after the negative impact of Covid-19”.
Source: Lusa via Club of Mozambique
