Good afternoon. Rogério Zandamela wants Mozambique and the wider world to believe that the Mozambican economy remains under control. But the Bank of Mozambique’s latest monetary policy decisions suggest a more fragile picture.
The central bank governor this week defended the government’s early repayment of around $700m to the International Monetary Fund — a striking use of scarce foreign exchange at a time of fuel shortages — saying Mozambique’s external reserves remain robust and cover around five months of imports. He also sought to reassure the market that commercial banks still have enough foreign-exchange capacity to issue letters of credit to fuel companies.
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The repayment was also a signal to the IMF. Mozambique is trying to negotiate a new programme with the Fund, which is expected to return to Maputo in June for talks. Paying off the arrears was one of several moves designed to reopen the door to external financing, alongside the government’s hiring of international advisers on sovereign debt and its apparent willingness to accept greater exchange-rate flexibility.
That gives Zandamela’s message a clear purpose. A new IMF programme would give Mozambique access to concessional financing, help unlock other multilateral support, and reassure creditors at a moment when liquidity is tight and foreign exchange remains scarce. The government needs to show that it has restored discipline after the previous programme stalled amid concerns over fiscal slippage, debt pressures, and exchange-rate policy.
But confidence cannot rest on reassuring language alone. The Bank of Mozambique's monetary policy committee, the CMPO, kept its policy interest rate unchanged, but raised mandatory reserve requirements on metical deposits back to 39%. That is a significant withdrawal of liquidity from the banking system. It comes as the central bank itself acknowledges the risk that inflation could return to double digits. A central bank relaxed about the outlook would have little reason to squeeze liquidity so hard.
