Maputo, 17 Jul (AIM) – Mozambique’s international reserves have been falling since 2021, but still cover 4.3 months of estimated import needs, above the recommended threshold, according to the International Monetary Fund (IMF).
“Gross international reserves cover almost 4.3 months of imports, which is above the commonly recommended minimum buffer”, says an IMF report released on Friday on the final approval of the review of the Extended Credit Facility (ECF) for Mozambique.
It adds that Mozambique’s international reserves have “fallen since the beginning of 2021” and reached 2.9 billion dollars at the end of last year, “covering 4.3 months of projected imports of goods and services not related to mega-projects in 2023.”
The IMF recognizes the impact of high costs of fuel imports on Mozambique’s international reserves, given the supply of foreign exchange to major fuel importers.
“At the same time, imports not related to mega-projects have increased significantly in the last two years, further reducing the import coverage of reserves”, the document says.
The announcement of the IMF’s approval of the revision to the ECF was made on 6 July, guaranteeing a disbursement of 60.6 million dollars to Mozambique. In the note that accompanied the announcement of the second review of the program approved in May 2022, and which brings the total amount already received by Mozambique to 212.09 million dollars, the IMF says it allowed the non-observation of two criteria: the primary budget balance at the end of last year and the accumulation of external debts by the public sector.
In its macroeconomic forecasts for this year, the IMF predicts an acceleration of Mozambique’s Gross Domestic Product (GDP) growth from 4.2 per cent in 2022 to seven per cent this year, anticipating that by the end of the year the rate of inflation will have fallen from 10.3 per cent to 6.7 per cent, the same as in 2021, but still almost double the previous two years.
The debt-to-GDP ratio is expected to maintain its downward trajectory, and reach 89.7 per cent at the end of this year, improving from 95.5 per cent of GDP last year.