Maputo, Aug. 16, 2024 (Lusa) - The Bank of Mozambique has revoked a penalty it previously enforced of blocking the account of banks that incur a deficit in two consecutive periods of constitution of mandatory reserves, according to a notice from the institution to which Lusa had access to Friday.
In the document, which has been in force since 9 August, the central bank recognises that it is "necessary to adjust the penalty regime" provided for in notice 1/GBM/2023, of 26 April, which last year approved the regulation on the calculation and constitution of mandatory reserves.
Now, the central bank has decided to revoke article 13 of that notice, concerning the blocking of accounts of offending banks.
"If a credit institution incurs a deficit in two consecutive periods of constitution of mandatory reserves, the Bank of Mozambique will automatically block the balance of the free movement account," reads the now repealed article, which has not so far been replaced by another penalty.
In the 12 months to the end of April, the volume of compulsory reserves held by Mozambican banks - set at maximum coefficients of around 40% by the central bank - grew by 53.3%, making for an increase of 306% since the end of December 2022, when they totalled 62,144 million meticais (€900 million).
Lusa reported on 1 August that the bank's Monetary Policy Committee (CPMO) decided to keep the mandatory reserve coefficients for commercial banks unchanged, at maximum values, at least until the end of September, despite appeals from businesspeople and the International Monetary Fund, which has criticised the measure.
The decision taken at the meeting of the committee was to maintain the obligation for commercial banks to place 39% of their resources in national currency and 39.5% in foreign currency with the Bank of Mozambique as reserves.
The next CPMO meeting is scheduled for 30 September, so these coefficients will remain unchanged for at least another two months.
Lusa reported in July that the IMF was in favour of reducing the "high" reserve ratios demanded by the Bank of Mozambique of commercial banks in order to boost the economy, advising the introduction of alternative measures to absorb excess liquidity and the remuneration of these reserves.
Reducing the high reserve requirements "is essential to ease financial conditions," argues the IMF's report on the fourth evaluation of the Extended Credit Facility programme for Mozambique. Although the country's financial system has a structural liquidity surplus, it adds, the significant increases in reserve requirements in 2023 from around 10% to 40% "may have been greater than necessary to absorb excess liquidity."
On 25 July, the Confederation of Economic Associations of Mozambique (CTA) cited a deficit of $400 million in foreign currency, leading to delays in payments abroad, fines and shortfalls in invoicing, and called on the central bank to reduce the mandatory reserve ratio.
According to data from the CTA, the unmet needs in imports or payments abroad already "amount to $400 million [€369 million]" in 2024, due to "liquidity constraints" of foreign currency in banks.
The situation arises, it said, because the high ratio of mandatory reserves that banks have to make.
"In general, the lack of foreign currency on the market has constrained the process of paying invoices abroad," it quoted CTA vice-president Zuneid Calumia as saying. "As a result of the difficulties that economic agents have faced in making payments abroad, there have been problems such as the discreditability of Mozambican suppliers, fines for late payments, lack of stock, delays in supplying services, delays in shipping equipment to Mozambique, a drop in production and billing, a failure in the project construction schedule, an increase in the cost of implementation."
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