The Bank of Mozambique (BdM) announced that the volume of Mozambican bank reserves reached 245.5 billion meticais in November last year, as a result of the central bank’s intervention to absorb excess liquidity. According to a statistical report from the institution, the volume of these reserves has grown practically every month since April 2023.
Initially, the commercial banks’ mandatory reserves at the BoM were set at 10.5% in national currency and 11% in foreign currency at the beginning of January 2023. However, in the first six months of last year, the BdM increased this coefficient twice, citing the need to absorb excessive liquidity in the banking system to avoid inflationary pressures.
The last of these increases took place in June, raising bank reserves to 39% of deposits in national currency and 39.5% in foreign currency. This decision had impacts perceived by the Confederation of Economic Associations of Mozambique (CTA), which considered that it made it more expensive to take out bank financing, an essential mechanism in an economy of Small and Medium-sized Enterprises (SMEs).
The management of bank reserves is crucial to the country’s economic and financial stability, as it influences the availability of credit and the cost of financing for companies and consumers.
The BoM’s ability to adjust reserves according to the needs of the economy is fundamental to guaranteeing a healthy balance between the supply and demand of money and credit.The upward trend in bank reserves in Mozambique signals the importance that the central bank attaches to managing liquidity in the financial system and controlling inflation, which are essential factors for the country’s macroeconomic stability.
