Central Bank of Mozambique announces measures to stabilise the economy

22 July 2016

The Governor of the Bank of Mozambique (BM), Ernesto Gove, said Thursday in Maputo that the effect of the tightening of lending rates on the macroeconomic stability of the country should only be felt at the end of the first quarter of 2017.

The governor, speaking at a press conference to announce the decisions of the Monetary Policy Committee of the Bank of Mozambique, explained that such measures are in addition to others that are being implemented by other institutions.

The measures include spending cuts safeguarding the necessary resources to ensure the production and normal operation of the social sectors.

The Monetary Policy Committee raised benchmark interest rates once again, a measure justified by the need to contain inflation that at present stands at 19.7% per year in Mozambique.

“We do not expect an immediate effect when taking these measures. Maybe towards the end of the first quarter of 2017, we will be able to see some trend for improvement of macroeconomic indicators,” he said.

“At the macroeconomic level we must also make the best use of the resources we have in agriculture, small industry (…) because I believe we have great potential,” he said.

The governor explained that Mozambique is faced with a confluence of events that gave rise to the crisis

“We started a year ago with a shock that was the drought in some regions and flooding in others. This is a factor that impacts directly on the real economy in that it prevents the production,” he said.

The fall in international prices of raw materials, since the second half of 2015 is another reason given by Gove.

“In addition to these factors came the situation of the cooperation partners suspending their support. This involves US$450 to 500 million no longer flowing into the country,” the governor of the Bank of Mozambique explained. (macauhub/MZ)