The governor of the Bank of Mozambique said on Wednesday November 1st that the current slowdown in inflation was the result of the “restrictive monetary policy stance” adopted in recent months by the Central bank, but stressed that “high uncertainties prevail”.
Speaking Wednesday November 1st at the opening of the central bank’s 48th consultative council which is being held in the city of Inhambane, Rogério Lucas Zandamela pointed out that underlying inflation, which does not take into account energy or unprocessed food prices, has even “increased in the last three months”. “Although it is not at alarming levels, we are closely monitoring its evolution”, he said.
In the same speech, he pointed out that annual inflation had even “been decelerating” since the beginning of the year, standing at 4.6% in September, “after reaching a peak of 12.9% in August 2022”: “This deceleration essentially reflects the combined effect of exchange rate stability and the restrictive stance of monetary policy, as well as the fall in food and fuel prices on the international market”.
He added that in terms of foreign transactions, Mozambique recorded “a 78.3% improvement in the current account deficit” in the first six months of 2023, “favored by the reduction in imports from major projects”.
“The country has sufficient gross international reserves to cover around four months of imports of goods and services, excluding imports from major projects”, he said.
Domestically, the governor of the Bank of Mozambique acknowledged “the strong pressure on public spending” in the country, “in a context of weak revenue collection and limited sources of external financing”, which “is contributing to an increase in fiscal risk and domestic indebtedness”.