The base interest rate was raised from 15.25% to 17.25% by the Bank of Mozambique (BdM) on 30 September. The Association of Mozambican Banks (AMB) said it would maintain the prime rate, the interest charged by banks to good customers, at 20.6%. (O Pais 7 Oct) Compared to an inflation rate of 12.1%, this gives the banks a profit of 8.5%, and makes borrowing too expensive for most businesses.

External funding, mostly aid, fell by 12% in the first half of the year, from $187 mn in the first half of 2021 to $166 mn in the first half of this year. Government has increasingly resorted to domestic borrowing, which has almost doubled in less than three year, from $2.1 bn at the end of 2019 to $4.1 bn in September 2022. Government is now paying 19.63% on two year bonds, and in general banks are more willing to lend to government, which cuts credit to the economy.

International reserves have fallen sharply. They are now $2.7 bn, which would cover only 3 months of imports of goods and services, excluding the big projects, compared to August 2020 when they were $3.9 bn covering six months of imports.

Mozambique remains an extractive economy. The five biggest exports in the second quarter of 2022 were coal ($817 mn), aluminium (£597 mn), electricity ($129 mn), natural gas ($98 mn) and heavy sands ($94 mn).

(Banco de Moçambique, Conjuntura económica e perspectivas de inflaçao, September 2022, 3 October)