In December 2024, mandatory reserves of Mozambican banks reached €4.441 billion, a 15% increase from the previous year. The Bank of Mozambique increased reserve coefficients earlier in 2023 to manage liquidity and inflationary pressures. Facing a foreign currency shortage, the central bank subsequently reduced these coefficients to enhance liquidity for economic recovery.
In December 2024, Mozambican banks’ mandatory reserves reached an unprecedented 307.8 billion meticais, approximately €4.441 billion, marking a 15% increase over the previous year. Reports from the Bank of Mozambique indicate that this rise has led to consecutive monthly records in compulsory deposits over the past eighteen months. In September 2023, these reserves totaled about 237.092 billion meticais (€3.420 billion), witnessing more than a 9% increase between November and December 2024.
The Bank of Mozambique established the mandatory reserves at a 10.5% coefficient for national currency and an 11% coefficient for foreign currency in January 2023. During the first half of 2023, the central bank raised these coefficients twice to mitigate excessive liquidity in the banking system that posed inflationary risks. By June 2023, the reserves rose to 39% for national currency deposits and 39.5% for foreign currency deposits.
Since the end of December 2022, when reserves were at 62.144 billion meticais (€896 million), there has been a near 400% increase in mandatory reserves held at the central bank. In response to the growing shortage of foreign currency, local business leaders have urged the central bank to relax foreign currency reserve requirements. Following this, on January 27, the Bank of Mozambique’s Monetary Policy Committee decided to lower the mandatory reserve coefficients to 29% for national currency and 29.5% for foreign currency, aimed at enhancing liquidity to bolster economic productivity and goods supply.
The recent record-high mandatory reserves of Mozambican banks reflect significant growth and adjustments within the banking sector, driven by the Bank of Mozambique’s strategic policy decisions. The latest adjustments to reserve coefficients signify the central bank’s commitment to increasing liquidity in response to domestic economic challenges. The evolution of these reserves, alongside adaptations to reserve requirements, underlines the central bank’s proactive approach in balancing inflation control and economic support.
Original Source: clubofmozambique.com
