A recent statistical report by the Bank of Mozambique (BdM) revealed that physical cash in circulation in the country registered a significant increase of 10.6% in December, ending the year at 78.2 billion meticais. These figures indicate a substantial increase compared to the 70.7 billion meticais that were in circulation at the end of November.
The BdM report also revealed that this amount corresponds to around 243.2 million banknotes and 553.1 million coins. Despite the monthly increase, the total amount in circulation was still 2.3% below the 80.8 billion meticais recorded in December 2022. Withdrawing money from circulation is a common practice of contractionary monetary policy, used by central banks to control inflation.
The 20 metical note circulated the most in December, with 47.8 million units, while the 0.50 metical coin led the way among currencies, with 122.8 million units.
In terms of economic impact, Mozambique recorded accumulated inflation of 5.30% in 2023, with an increase of 1.29% in December alone compared to November. The general increase in prices was mainly driven by the food and non-alcoholic beverages division, which contributed 3.34 percentage points to accumulated inflation. In terms of the 12-month average variation, Mozambique recorded a price increase of 7.13%, with the education, miscellaneous goods and services, and food and non-alcoholic beverages divisions standing out.
Looking to the future, Mozambique’s Minister of Economy and Finance, Max Tonela, predicts economic growth of 5.5% of GDP in 2024, after an estimated 5% growth in 2023. Government forecasts indicate inflation of 7% in 2023 and 2024.
The significant increase in money in circulation and inflation in Mozambique highlights the country’s economic dynamics. With economic growth prospects and inflation projections, the country faces challenges and opportunities to maintain its economic stability and promote development.
