16 December 2012

Mozambique: Bank of Mozambique Holds Interest Rates Steady

Maputo — Maputo, 16 Dec (AIM) – The Bank of Mozambique has decided to keep its key interest rates at their current levels.

In what was almost certainly its last meeting of the year, the Bank’s Monetary Policy Committee announced on Wednesday that the Standing Lending Facility (which is the interest rate paid by the commercial banks on money borrowed from the central bank on the Interbank Money Market) will remain at 9.5 per cent.

This follows five cuts in the rate earlier this year, most recently in November. At the beginning of 2012, the Standing Lending Facility rate was 15 per cent.

The interest rate paid by the central bank to the commercial banks on money they deposit with it (the Standing Deposit Facility) remains at 2.25 per cent, while the Compulsory Reserves Coefficient - the amount of money that the commercial banks must deposit with the Bank of Mozambique - remains at eight per cent.

The statement from the Monetary Policy Committee noted with concern continuing falls in the world market prices of some of Mozambique’s main exports. Should this trend continue, it warned, Mozambique’s current account deficit will worsen.

Over the past month, the price of Mozambique’s main export, aluminium, has fallen by 4.4 per cent. The price of thermal coal, now being produced on a large scale at the open cast coal mines in Tete province, fell by 8.4 per cent, while the price of cotton fell by 2.6 per cent. On the other hand, the prices of coking coal rose by 2.9 per cent, and of natural gas by 1.7 per cent.

The price of some key imports, notably liquid fuels, is also dropping. At the end of December, the price of a barrel of Brent Crude was 111.79 US dollars. But on 11 December it was quoted at 108.56 dollars.

Mozambique’s total bill for petroleum products is estimated at 700 million dollars a year.

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