Maputo — The Monetary Policy Committee of the Bank of Mozambique (CPMO), meeting in Maputo on Wednesday, announced a reduction of 75 base points in its benchmark interest rate, the MIMO rate.
The rate falls from 15 to 14.25 per cent. This is the fourth time this year that the CPMO has cut the MIMO rate. It started off the year at 17.25 per cent, then fell to 16.5 per cent in January, 15.75 per cent in March, 15 per cent in May, and now 14.25 per cent.
A statement from the CPMO said the decision to cut the rate "is based on the continual consolidation of the prospects for single digit inflation (i.e. less than ten per cent) in the medium term, in a context where assessment of the risks and uncertainties associated with the projections remains favourable.
Addressing a Maputo press conference, the governor of the Bank of Mozambique, Rogerio Zandamela, said that inflation is low and stable. The annual inflation rate fell to three per cent in June, after 3.1 per cent in May. Underlying inflation (which excludes fruit and vegetables and goods with administered prices) also remains low.
The bank regards the prospect for single digit inflation as resulting from the stability of the Mozambican currency, the metical, and the impact of the measures taken earlier by the CPMO.
The bank forecasts "moderate economic growth' in the medium term. Preliminary data from the National Statistics Institute (INE) indicate that, the country's gross domestic product, excluding liquefied natural gas (LNG) grew by 2.3 per cent in the first quarter of this year. When LNG is included, the growth rate rises to 3.2 per cent.
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Over the medium term, the CPMO says, "moderate growth in economic activity is projected, despite the prevalence of uncertainties about the impact of climatic shocks'.
The statement warned of continued pressure on domestic public indebtedness. The domestic debt now stands at 377.9 billion meticais (about 5.9 billion dollars, at the current exchange rate). The debt had risen by 65.6 billion meticais since December 2023.
The CPMO promises that it will continue reducing the MIMO rate, but "the pace and magnitude of the adjustments will depend on the prospects for inflation'.
Zandamela also confirmed that former Finance Minister Manuel Chang (currently on trial in New York on charges of conspiracy to commit money laundering, wire fraud and securities fraud) has returned the seven million dollars he took in bribes from the Abu Dhabi-based Privinvest Group.
Chang had handed the money over more than year ago and it is currently in the custody of the Bank of Mozambique. Its final destination will depend on the lawsuits still under way in the London High Court.
On Monday, Judge Robin Knowles ruled that Privinvest should pay Mozambique compensation of around 2.3 billion US dollars. But Privinvest immediately announced that it would appeal, and some skeptical voices doubted whether Privinvest has billions of dollars readily available to pay.
Zandamela did not join the chorus of those who believe Mozambique will never see any of the money. "This is a moment for celebration', he declared, "and of desiring that everything will go well. There's nothing easy about this. You don't develop a country with easy things'.
