Mozambique's central bank maintained its benchmark standing facility rate at 7.50 percent and expressed its concern over the destructive impact of floods in the central and northern regions of the country on human lives, infrastructure and the ability for goods and people to move.
The Bank of Mozambique, which cut its rate by 75 basis points in November, also noted its 2015 objective of annual inflation of 5.5 percent, down from the 2014 goal of 6.0 percent, and annual economic growth of 7.7 percent an international reserves that cover four months of imports.
The central bank also pointed to the current international economic risks, with a slowdown in the global economic recovery, falling prices of major commodities, which impacts the country's balance of payments.
The central bank added that it would intervene in money markets to ensure the monetary base does not exceed 54.689 billion meticais, down from 56.969 billion in December, which topped the bank's target of 55.299 billion that it set on December 12, 2014.
Mozambique's international reserves rose by US$ 16.2 million in December with a balance of $2.8615 billion, $285 million below target, the equivalent of about 4 months of import cover.
Mozambique's inflation rate rose to 1.93 percent in December from 1.79 percent in November.
The Bank of Mozambique issued the following statement (translation by Google)
"The Monetary Policy Committee of the Bank of Mozambique (MPC) met today in its first
ordinary session of this year, and appreciated the document Monetary Policy, which reports the
economic and financial information for the months of November and December 2014 and
so the latest developments reported to January 2015, for some indicators.
The document analyzes: (i) developments in international economic and financial situation and
regional; (ii) the evolution of the main macroeconomic and financial indicators of Mozambique,
with emphasis on inflation, monetary and credit aggregates; (iii) the short and medium projections
deadlines for inflation; and (iv) monetary policy measures to ensure the
compliance with the 2015 macro-financial program.
I. RECENT DEVELOPMENTS IN INTERNATIONAL AND REGIONAL ECONOMIES
The Organization for Economic Cooperation and Development (OECD) has lowered the outlook
of global economic growth for 2014 and 2015, justified fears of stagnation of
economies in the Eurozone, the deepening recession in Japan and the slowdown in
economic growth in emerging markets, based on the GDP information concerning
the third quarter of 2014, which is also strengthening Forecasts by other
specialized agencies of the slow recovery in global economic activity.
The latest international environment has also been characterized by a sharp drop
the price of the main commodities, especially oil, reflecting the contraction in demand
world dictated by moderate growth in China and the countries of the Eurozone, as well as the
improvement of the reserves of this raw material in the US.
In avançadas1 economies
, Data released recently reported the third quarter of
2014 show that the economic growth of 2.7% in the US stood above estimates
initial 2.4%, while in the UK the growth of 2.6% was below prospects
initial 3.0%. This save block there was a slowdown in inflation in the month of
December, especially the eurozone, where fears of deflation could jeopardize the
recovery of economic activity in the region. Dollar of the United States remained,
overall, strong against major currencies this block, although there has been a slight recovery
Japan Yen. With these developments, the central banks of these countries decided to keep
unchanged its policy interest rates.
The economies of emergentes2 market
Also observed up a slowdown in inflation,
except Russia, which kept accelerating to 11.4% in December, resulting from strong
depreciation of the ruble against the US dollar, which reached 76.5% in this period. on
Brazil, although inflation is situated slightly above the target, started a movement
descendant, a milder Real depreciation scenario. The central banks of Brazil and
Russia decided to increase interest rates by 50 basis points and 8.50 percentage points to 11.75% and 17.00%,
respectively, to contain inflationary pressures that these economies face, and the
other central banks decided to keep unchanged its reference interest rates.
The economies of SADC3
, Recent data indicate that in the third quarter, the economies of Africa
South, Botswana and Mozambique showed an acceleration of GDP growth, against
a slowdown in Mauritius. The growth of the South African GDP was 1.4%, reversing the
tendency to registered slowdown in the first two quarters of 2014. In November,
Inflation has picked up different behavior, with most countries registering a
slowdown in annual inflation, excluding Angola and Zambia, where this indicator accelerated. on
Malawi, inflation remained stable, although it continues to have the highest rate in the region
(23.7%). At the end of 2014 all the currencies in the region had become weakened against the dollar
US, and the Zambian Kwacha depreciated 15.8% and the South African Rand 18.7%, a
scenario in which the depreciation of the Malawi Kwacha slowed from 22.1% to 9.6%. Most
central banks in the region decided not to change the policy interest rates, with the exception of
central banks of Zambia and Angola, which revised upwards by 25 basis points and 50 basis points to 9.00% and 12.5%
In the international market, the average prices of the main commodities with significant weight in
balance of payments of Mozambique and the behavior of inflation observed in December,
a different behavior, especially the reduction in monthly terms, prices of
brent (-20.7%), aluminum (-7.1%) and sugar (-5.8%), compared to an increase in wheat prices
(4.2%), gas (2.8%) and cotton (1.2%). In annual terms, stress is the price falls
Brent (-43.8%), coking coal (-28.7%) and cotton (21.9%), with aluminum being the only
merchandise with a positive annual variation of price (9.0%). On the last day of December 2014, the
Brent barrel price stood at USD 57.33, which corresponds to a monthly fall
18.3%, and further reduced to $ 46.59 at the close of January 13.
II. DEVELOPMENTS IN THE ECONOMY MOZAMBICAN
According to information published by the National Statistics Institute (INE) for the
December 2014, the Consumer Price Index (CPI) of Maputo City recorded a
positive change of 0.64%, unchanged from the same period last year, after 0.41% in
Last November. Thus, the annual average inflation and slowed to 1.10% and 2.29%,
respectively. The behavior of monthly inflation in Maputo City reflected the variation of
prices of food classes and non-alcoholic beverages, whose contribution to the variation
monthly general index was 0.58 percentage points, and transport, with a contribution of 0.03 percentage points. the
Products with the largest contributions to the positive monthly price variation were coconut,
tomato and long-distance transport.
In line with the trend of the CPI Maputo, the CPI Mozambique, an indicator that incorporates indexes
prices of Maputo, Beira and Nampula, recorded in December a monthly variation
positive 0.71%, after 0.36% in November 2014. Annual inflation accelerated to 1.93% and the
annual average slowed to 2.56%. Power classes and non-alcoholic beverages, as well
clothing and footwear, were the ones that contributed most to this monthly change, with 0,54pp and
0.14 pp, respectively.
The low and controlled level of inflation recorded in 2014 reflected roughly the stability of
Metical in the domestic foreign exchange market for most of the year, the coordination of monetary policies
and tax, aimed at regulating liquidity at adequate levels to sustain economic growth, greater availability of food, with particular emphasis on fruits and vegetables, and the
Falling commodity prices in the international market, in a context where prices
administered products have not changed.
According to the source, the Mozambican economy, measured by GDP, recorded an annual growth
7.4% in the third quarter of 2014, representing an acceleration of 1 bp compared to
previous quarter, in line with the growth expected for the closing of 2014. The activity
Economy in the quarter was supported by the secondary sector which grew 10.8%
reflecting the expansion of the processing industry 14.8%, corresponding to an acceleration in
2.3 percentage points from the previous quarter, reinforced by the development of the construction sector (11.3%). The
tertiary sector grew 8.3%, determined by the increase of trade activity and service
repair (7.5%) and damped by the branch of the fall of hotels and restaurants (-3.0%). relatively
the primary sector, with an annual growth of 6.6%, the branch of mining continues to
register the highest performance (11.5%), despite the continued decline in the price of coal on the market
international, followed by agriculture (7.0%).
In the monetary sector, provisional data for December 2014 indicates that the balance of the base
monetary, operational variable monetary policy, stood at 56,969 million Meticais, value
which is above the target set in 1670 Meticais (3%). The basis of behavior
monetary December reflected the increase in notes and coins in circulation in the amount of 2,263
million MT, due to an increasing demand for cash by economic agents, and
bank reserves at 780 million largely explained by the increase of deposits
economy, may reflect the dynamics of economic activity. In annual terms, the monetary base
increased by 9,748 million meticais (20.5%) and was in line with the outlook made in a
scenario in which inflation was well below the established goal.
According to provisional data of monetary accounts reported to November 2014, loans
the national banking system to the private sector increased in the month in 6.9681 billion Meticais
(3.9%), and the component denominated in national currency contributed 5109900000,
bringing the balance to 186 969 300 000, of which 80% are denominated in national currency. in
have annual, credit to the private sector expanded by 24.3%. In the same period, the balance of
aggregate broader money (M3), composed of notes and coins in circulation and deposits
residents, excluding the state, increased in the month 2.7845 billion Meticais, setting up in
247,838 million, representing an annual increase of 19.9%.
In the external sector, provisional figures for December show an increase in reserves
Net international (RIL) in USD 16.2 million in the month, primarily explained by the entry
external assistance in USD 158.2 million, with net sales of foreign currency made by the BM in
MCI reached the amount of USD 184.2 million (the cumulative total for the year was USD 1.2077 billion,
against USD 623.4 million in 2013). The balance of RIL in 2014 was $ 2.8615 billion (USD 285
million below the target), reflecting a cumulative wear of USD 134.1 million in the year. in
terms of gross international reserves, this balance is equivalent to about 4 months of coverage
imports of goods and non-factor services, where large of transactions excluded
Provisional data indicate that over the first nine months of 2014, current account
of Mozambique with the rest of the world, including major projects resulted in a balance
negative USD 3.7411 billion, an amount that represents a deficit slowdown in about
7% (USD 267.1 million), compared with the same period of 2013. The reduction in the account deficit
Current reflected basically the combined effect of revenue growth of 6.3% in exports and reduced imports by 5.8%, in a context where both the service account as the
of primary income registered a worsening of their deficits. Excluding the large
projects, the magnitude of the current account deficit goes to $ 2,470,600,000, an increase
annual in USD 189.5 million.
In the Interbank Foreign Exchange Market (MCI), data for the closing of December 2014 show
the US dollar was quoted at 31.60 MT, which corresponds to a monthly depreciation and
Annual Metical against this currency 1.22% and 5.51%, respectively. In transactions segment
retail there was a substantial reduction in pressure that characterized the last three months of
year, through the enhancement of interventions carried out by the WB and adequate reaction of the market, which
contributed to dampen expectations of a spiral of depreciation. Meanwhile, Rand
South Africa was quoted at 2.72 MT, which corresponds to nominal gains of Metical terms
3.89% monthly, and annual 4.32%.
Interbank Money Market (IMM), average interest rates weighted the auctioning of
Treasury Bills presented in December, stability around 5.37% (-2 bp), 6.64%
(-12 Bp) and 7.25% (-10 bp) for maturities of 91 days, 182 days and 364 days, respectively.
Over the same period of 2013, the above reported rates remained virtually
unchanged, with the exception of the rate for the maturity of 91 days, which increased by 14
bp. Fees for liquidity swaps among credit institutions remained at 3.11% in
over the previous month and decreased by 32 basis points compared to December 2013.
In the retail market, the average nominal interest rate charged by credit institutions in their
Lending to maturity of one year, remained practically stable, to be located in
November 2014, around 20.9%. The average interest rate of deposit stood at
9.13%, the same rate of the same period the previous year. In the same period, the average prime rate
the banking system remained at 14.75%, which is equivalent to a decrease of 22 bp relative to
observed in November 2013.
III. POLICY DECISION
The Monetary Policy Committee of the Bank of Mozambique noted the risks prevailing in
international economic and financial environment, characterized by the slowdown in recovery
global economy and falling prices of main commodities in the international market, with
impact on the balance of payments of the country.
Regarding the national economy, the MPC noted the good macroeconomic performance
achieved in 2014, with emphasis on inflation - which stood below the established goal -
GDP growth and that the information available to date, it remains in the path of
The MPC noted with concern the occurrence of floods in the central and northern regions of the country and the
destructive effects they cause to human lives, infrastructure and movement of people and goods,
and reaffirmed the commitment towards prudent monetary policy and strengthening coordination
policies, conditions for the achievement of macroeconomic objectives
set for 2015, including an annual inflation of 5.5%, an annual growth
GDP of 7.7% and a position of international reserves four months of coverage
import of goods and non factor services.
Thus, the MPC decided:
Intervene in interbank markets in order to ensure that the monetary base in January
2015 does not exceed 54,689 million MT;
Keep the interest rate of the Permanent Facility Liquidity supply by 7.5%;
Keep the Standing Deposit Facility interest rate at 1.50%; and
Maintain the required reserves coefficient by 8.0%.
The next meeting of the MPC will take place on February 11, 2015.