Mozambique. Banks' required reserves have already fallen by 27%.

The mandatory reserves of Mozambican banks, based on deposits, fell again in June, to 212.798 billion meticais (2.859 billion euros), accumulating a 27% drop this year, according to official data.

According to the history of the latest statistical reports from the Bank of Mozambique, these mandatory reserves at the central bank compare with the record of last December , of 291,457 million meticais (3,916 million euros), immediately before the easing of these restrictions.

In April, the volume of these reserves that banks have to make rose to 227,373 million meticais (3,054 million euros) and in May they fell by 4.3%, followed by a new fall in June of 2%, according to the most recent report from the central bank to which Lusa had access this Friday.

The mandatory reserves of commercial banks were set by the Bank of Mozambique at a ratio of 10.5% in national currency and 11% in foreign currency at the beginning of January 2023 and, in the first six months of that year, the ratios were increased twice, to “absorb excessive liquidity in the banking system, with the potential to generate inflationary pressure”.

The last of these increases took place in June 2023, reaching 39% of deposits in national currency and 39.5% in the case of foreign currency to remain in bank reserves.

Since the end of December 2022, when they amounted to 62,144 million meticais (834 million euros), the volume of bank reserves held by the central bank increased by almost 400%, until the end of 2024.

Faced with a lack of foreign currency in the domestic market, Mozambican businesspeople have insisted in recent months on the need for the central bank to ease mandatory foreign currency reserve requirements.

This decision only came about on January 27 of this year, when the Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to cut the mandatory reserve coefficients in national currency, to 29%, and in foreign currency, to 29.5%.

“Aiming to provide more liquidity to support the economy in restoring productive capacity and the supply of goods and services,” the CPMO meeting statement said.

Meanwhile, the governor of the Bank of Mozambique, Rogério Zandamela, stated on March 26 that liquidity in the financial system, particularly in foreign currency, is sufficient , following the reduction of coefficients decided in January, which he does not expect to repeat for now.

"Right now, we're comfortable with the existing liquidity level in the system. There's no need to touch structural liquidity by altering the required reserves. We'll maintain them. The coefficients aren't something to be trifled with," said the governor, questioned by reporters at the end of the last CPMO meeting.

At its meetings in March, May and July, the CPMO cut interest rates again, but kept the mandatory coefficients unchanged, with Rogério Zandamela justifying that the measure adopted at the previous meeting “freed up a lot of liquidity”.