Maputo — The Monetary Policy Committee of the Bank of Mozambique (CPMO), meeting in Maputo on Friday, decided to keep the Bank's main interest rate unchanged.

Thus the Monetary Policy Interest Rate (MIMO) will remain 17.25 per cent, at least until the next meeting of the CPMO, scheduled for late November.

A statement from the CPMO said the decision not to raise interest rates further was taken "because of the worsening risks and uncertainties associated with the projections for inflation' - despite the forecast that annual inflation will remain at less than ten per cent in the medium term.

Annual inflation has been falling - from 5.7 per cent in July to 4.9 per cent in August. The CPMO attributes this decline to a fall in food prices, favoured by a longer than usual cool season, in the context of a stable exchange rate for the metical.

But there remain underlying risks, notably pressure on public expenditure, and uncertainly about the effects of extreme climatic events, against the backdrop of the continued Russian war against Ukraine, and recent increases in international fuel prices. The CPMO warned that these factors could reverse the current trend and lead to an increase in inflation.

In the second quarter of 2023, Mozambique's gross domestic product grew by 4.7 per cent, mainly due to the extractive industry, and particularly the production of natural gas. Liquefied natural gas is now being exported from a floating platform in the Rovuma Basin, off the coast of the northern province of Cabo Delgado.

Even when the natural gas projects are excluded, the forecast is for continued economic recovery, despite the impact of climatic shocks on agricultural production.

The CPMO warns that public debt is continuing to rise. Domestic public debt stood at 321.1 billion meticais (about five billion US dollars, at the current exchange rate), an increase of 46 billion meticais on the figure for December 2022.