The compulsory reserves of Mozambican banks grew again in September, reaching an all-time high of 268,392 million meticais (4,031 million euros), an increase of 13% over the last year, according to official data compiled today by Lusa.
According to data from the Bank of Mozambique’s statistical reports, the volume of these reserves has been breaking consecutive monthly records for almost the last year and a half. In September 2023, these mandatory reserves amounted to 237,092 million meticais (3,561 million euros).
The mandatory reserves of commercial banks at the central bank were set by the Bank of Mozambique at 10.5% in national currency and 11% in foreign currency at the beginning of January 2023.
But in the first six months of 2023 the central bank increased the coefficient twice, in order to “absorb excessive liquidity in the banking system, with the potential to generate inflationary pressure”.
The last of these increases took place in June last year, reaching 39% of deposits in national currency and 39.5% in the case of foreign currency to be held in bank reserves.
Since the end of December 2022, when they amounted to 62,144 million meticais (933 million euros), the volume of bank reserves held by the central bank has increased by more than 332%.
On September 30, the Bank of Mozambique decided to keep the mandatory reserve ratios of commercial banks unchanged at these maximum values, at least until November 27 – the date of the next meeting of the Monetary Policy Committee (CPMO) – despite previous appeals from businesspeople and the International Monetary Fund (IMF).
The IMF advocates reducing reserve ratios in order to boost the economy, advising alternatives for absorbing excess liquidity and remunerating reserves.
“Reducing the high reserve requirements is essential to ease financial conditions. Although the Mozambican financial system has a structural liquidity surplus, the significant increases in reserve requirements in 2023 [from around 10% to 40%] (…) may have been greater than necessary to absorb excess liquidity,” reads the IMF report on the fourth evaluation of the Extended Credit Facility program, concluded in July.
On July 25, Mozambican businesspeople pointed to the lack of foreign currency on the market, leading to delays in payments abroad, fines and shortfalls in invoicing, and called on the central bank to reduce the mandatory reserve ratio, which has so far had no effect.
“In general, the lack of foreign currency on the market has constrained the process of paying invoices abroad,” said CTA vice-president Zuneid Calumia.
