What You Need to Know
Mandatory reserves held by Mozambican banks fell by 13% in January 2025, reaching 225.3 billion meticais. This decline follows a record high of 291.457 billion meticais in December 2024, as the Bank of Mozambique adjusts reserve requirements to manage liquidity and support the economy amid foreign exchange shortages.
Africa-Press – Mozambique. Mandatory reserves held by Mozambican banks fell by 13% in January from the previous month’s peak, to 225.3 billion meticais (€3.05 billion), according to the Bank of Mozambique.
Data from a recent statistical report by the institution shows that commercial bank reserves at the central bank hit a record 291.457 billion meticais (€3.95 billion) in December 2024, immediately prior to the central bank’s easing of restrictions in January 2025.
The sharp decline in January contrasts with a 20% increase in December, when reserves rose to 259.197 billion meticais (€3.51 billion) following consecutive decreases linked to previous central bank easing.
The report offers no explanation for the strong growth in December and the subsequent fall a month later.
The reserve requirements for commercial banks were set by the Bank of Mozambique at 10.5% in local currency and 11% in foreign currency at the start of January 2023. In the first six months of that year, they were raised twice to “absorb excess liquidity in the banking system, which had the potential to generate inflationary pressure”, the central bank said at the time.
The last of these hikes occurred in June 2023, when 39% of local currency deposits and 39.5% of foreign currency deposits were required to be held in reserve.
Since the end of December 2022, when they stood at 62.1 billion meticais (€841 million), the volume of bank reserves held by the central bank had risen by almost 400% by the end of 2024.
Facing a shortage of foreign exchange in the domestic market, Mozambican business leaders had been lobbying the central bank since 2024 to ease foreign currency reserve ratios.
That decision finally came on 27 January 2025, when the Bank of Mozambique’s Monetary Policy Committee (CPMO) opted to cut reserve requirement ratios to 29% for local currency and 29.5% for foreign currency.
The measure aimed to “provide more liquidity to support the economy in restoring productive capacity and the supply of goods and services,” according to the statement released after the CPMO meeting, which has not altered these ratios since then.
The next bi-monthly CPMO meeting is scheduled for next Monday in Maputo.
The Bank of Mozambique has been adjusting reserve requirements to manage liquidity in the banking system, particularly in response to inflationary pressures. Since January 2023, reserve ratios for local and foreign currencies have been raised multiple times to absorb excess liquidity. The recent drop in reserves in January 2025 follows a significant increase in December 2024, reflecting ongoing challenges in the foreign exchange market and the central bank’s efforts to stabilize the economy. Business leaders have been advocating for lower foreign currency reserve ratios to enhance liquidity and support economic recovery.
