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In July, the International Monetary Fund (IMF) advocated reducing the “high” reserve ratios required by the Bank of Mozambique from commercial banks to boost the economy, recommending alternatives to absorb excess liquidity and the remuneration of these reserves.
The Bank of Mozambique has revoked a previously enforced penalty of blocking the account of banks that incur a deficit in the constitution of mandatory reserves for two consecutive periods, according to a notice from the institution.
The Bank of Mozambique has decided to revoke Article 13 of the notice, relating to the freezing of accounts for offending banks. In the 12 months to the end of April, the volume of mandatory reserves held by Mozambican banks – set at maximum coefficients of around 40% by the central bank – grew by 53.3%, an increase that rose to 306% since the end of December 2022, when they amounted to 62,144 million meticais (€900 million).
The decision taken at the meeting of the central bank committee thus maintained the obligation of commercial banks to reserve 39% of resources in national currency and 39.5% in foreign currency in the Bank of Mozambique. The next CPMO meeting is scheduled for September 30, so these coefficients will remain unchanged for at least another two months.
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In July, the International Monetary Fund (IMF) advocated reducing the “high” reserve ratios required by the Bank of Mozambique from commercial banks to boost the economy, recommending other alternatives to absorb excess liquidity and the remuneration of these reserves.
On July 25, Mozambican businesspeople reported a deficit of US$400 million in foreign currency, leading to delays in payments abroad, fines, and losses in invoicing, calling on the central bank to reduce the mandatory reserve ratio.
According to data from the Confederation of Economic Associations of Mozambique (CTA), unmet needs in imports or payments abroad “already amount to US$400 million [€369 million]” in 2024, due to “liquidity constraints” of foreign currency in banks. The CTA blamed the situation on the high mandatory reserve ratio that banks have to maintain.
