Good afternoon. Recent fuel shortages in the city and province of Nampula (see below) draw attention once again to Mozambique’s shortage of foreign currency, in particular US dollars. As we have noted before, there is no physical shortage of fuel in the country, but a lack of dollars is making it hard for fuel traders to secure the bank guarantees they need to release fuel from the storage tanks in which it is kept after being shipped into Mozambique, before being cleared by customs.
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Although the Bank of Mozambique did relax foreign currency reserve requirements in January, freeing up about $250m, they are not free to lend out all of this money, as Fáusio Mussá, chief economist at Standard Bank Mozambique, pointed out recently. They have to keep some foreign currency in reserve in case their customers withdraw the money they have deposited in dollars. And this is where a problem of sentiment arises. A lot of middle-class and wealthy people, as well as businesses, would rather keep their money in dollars, preferably out of the country.
