Bank of Mozambique controls money supply to curb inflation

14 March 2016

The Bank of Mozambique is taking more stringent monetary policy measures, taking into account the prospect of rising inflation that has partly been due to the depreciation of the metical, the central bank said in a statement released recently.

The Mozambican central bank said it would seek to contain the growth of the money supply to about 12 percent in 2016, and is prepared to keep track of internal and external risks and to take appropriate measures to maintain overall price stability.

The same statement quoted by daily newspaper Notícias, also said the Mozambican authorities gave assurances to the International Monetary Fund that this year the government would keep the overall budget deficit after donations to below 4 percent of gross domestic product (GDP), whilst the primary domestic surplus will total 1.6 percent of GDP.

“It is expected that revenues will total 26.2 percent of GDP, an increase of 1 percentage point compared to 2015, and that increase should be the result of the strong performance of taxes on international trade, increased royalties on oil, as well as administrative reforms in key areas such as stamp duty on alcohol and cigarettes, common customs duties and excise duties,” the central bank also said.

The IMF also expects costs to be reduced by 1.4 percent of GDP to 33.9 percent of GDP, which is consistent with the medium-term consolidation path set at the beginning of 2015. (macauhub/MZ)