Maputo, 26 May (AIM) – The Bank of Mozambique, in its role as regulator of the national financial system, has announced that the country’s inflation may continue to worsen, reaching double digits in the short and medium term if the conflict in the Middle East continues.
According to Zandamela, who was speaking to reporters on Monday, in Maputo, after the meeting of the Monetary Policy Committee (CPMO), an acceleration of inflation is expected depending on the duration of the conflict in the Middle East.
He explained that inflation projections are also influenced by “direct and indirect effects of adjustments to domestic liquid fuel prices, as well as interruptions in supply and imported inflation.”
The governor recalled that the annual inflation stood at 4.4 percent in April, after 3.4 percent in March. “Clearly, the risks and uncertainties associated with inflation projections continue to worsen. Domestically, the risks and uncertainties concern, firstly, the scale of the indirect effects of rising fuel prices on the logistics chain and the supply of goods”, he said.
Zandamela also explained that the government’s early full payment of the outstanding debt of 515.04 million Special Drawing Rights (equivalent to about 700 million US dollars) to the International Monetary Fund (IMF) did not affect the central bank’s accounts.
“We continue to have an extremely comfortable level of reserves. Today they stand at practically five months of import cover, which is very high, so this did not weaken us. When the decision was made, we were in an extremely comfortable position, and we remain so”, he said.
“Today we are secure, given certain risks that were emerging. The decision to pay the debt to the IMF in no way weakened the balance sheet of the Bank of Mozambique”, he added.
The country’s Net International Reserves (NIR) fell by 18 percent in March, to their lowest level in more than a year, at 3.486 billion US dollars, after the government used them to settle the debt with the IMF.
The country’s outstanding debt to the IMF fell to zero by the end of March. Mozambique is the only country in this situation among 85 countries listed.
Am/
