Currency scarce in Mozambique

The cost of living has risen again, officially over 2.23 percent for the month, mainly due to the rise in price of food imports. The food itself has not become more expensive, but more meticais are needed to buy the foreign currency required to pay for it.In April, the Bank of Mozambique had to spend US$39.7 million of its currency reserves to service external public debt of US$9.89 billion. The central finance institution, directed by Ernesto Gove, which continues to ignore the loans illegally backed by the state in its analysis of the national economy, does not indicate which debts were repaid, but it is unlikely that they are, as the EMATUM or Proindicus sums payable in the month would exceed US$190 million.Last Friday, the Bank of Mozambique’s Monetary Policy Committee decided to maintain the high cost of access to money in commercial banks. “Strengthening the intervention in the interbank markets in order to ensure that the balance of the monetary base for May 2016 is in line with the forecast of  US$69,507 million.”

Keeping the Permanent Liquidity Lending Facility interest rate at 12.75 percent, keeping the rate of Standing Deposit Facility interest at 5.75 percent and maintaining the Reserve Requirement Coefficient at 10.5 percent for liabilities in national currency and 15 percent for liabilities in foreign currency (effective from June 7, 2016) are the chief elements of monetary policy according to a central bank statement seen by @Verdade.

And measures that will continue to shrink national investment and lead to the loss of more jobs, as economic indicators continue to deteriorate.Gove, who admitted that the more than US$2 billion in loans backed by the state failed to enter into their coffers again ignores the impact of these debts, secretly contracted by the Mozambican Tuna Company (Ematum) , Proindicus and Mozambique Asset Management (MAM) and incurred by the state in violation of both the constitution as well as the budget law.However, the central bank revealed in its statement that the net international reserves declined in April to only US$1.7 billion due to net sales of foreign currency in the interbank foreign exchange market, net transfers of commercial banks and also “repayment of external public debt service in the amount of US$39.7 million”.

The statement does not specify which foreign debt was repaid.

We now know that the “total amount of public debt, including guarantees issued by the government and debts incurred by the Bank of Mozambique to finance the balance of payments, reported on December 31, 2015 is US$11.64 billion. Of this amount, US$9.89 billion is foreign debt, including US$247 million from the Bank of Mozambique,” according to Prime Minister Carlos Agostinho do Rosario’s statement of April 28.Following the taking on as sovereign debt of the Ematum loans, Mozambique should be paying investors US$112 million US dollars by this time, says specialist publication Zitamar News, which itself failed to ascertain whether any payment had in fact been made.The same publication indicates that Proindicus SA, which illegally contracted loans backed by the Armando Guebuza executive of US$622 million in 2013, should have paid about US$80 million to its creditors in April and another installment of US$24 million in May.Also according to Zitamar News, state company MAM, whose 2014 debts of US$535 million the state illegally endorsed, will pay creditors US$134 million in May.