Africa-Press – Mozambique. The Mozambican private sector yesterday welcomed the decision by the Bank of Mozambique to reduce the monetary policy rate (MIMO rate) from 12.75% to 12.25%, offering some relief to the market and restoring confidence for investors.
While acknowledging the efforts of the central bank, the private sector however considers this measure to be conservative, especially when compared with the bolder stance adopted by the institution when the rate was increased.
On the other hand, the representatives of the Confederation of Economic Associations (CTA), called on moratoriums to be applied, especially by commercial banks in their relations with customers, taking into account the impact of the demonstrations that affected the business sector.
This incentive could be materialized through a temporary relaxation of prudential requirements set by the central bank, such as the limits for the constitution of provisions for impairments and overdue loans.
According to Paulo Oliveira, president of the Communication and Information Services department at the CTA, the central bank should have gone beyond this reduction, given the delicate context caused by the demonstrations.
“The Bank of Mozambique should signal the incentive for commercial banks to apply moratoriums to their customers, in the context of the post-election demonstrations, through temporary relief from prudential requirements, such as limits on the creation of provisions for impairments and overdue loans”,Oliveira said
According to the CTA, such an approach would allow commercial institutions greater flexibility to renegotiate the terms of payment of loans with the affected companies, many of which are still awaiting concrete measures.
In turn, Eduardo Sengo, executive director of the CTA, acknowledged that renegotiations are already underway between commercial banks and their customers, but stressed that process was slow and insufficient to meet urgent needs.
“We understand that the Bank of Mozambique’s prudential ratios could be eased, thus allowing commercial banks to have greater room for manoeuvre to negotiate with their customers. This would make it possible to extend payment terms, reduce monthly instalments or even postpone them until effective payment conditions exist,” Sengo said.
This would help to prevent an increase in non-performing loans, mitigating risks to the financial system, he added.
Regarding foreign exchange, the CTA called on the central bank to resume, albeit temporarily, the provision of foreign exchange on the market, suggesting an allocation of 50% of fuel import invoices.
“If the support package includes a financing line, companies will need money to import equipment. Where will they get the debts? International reserves can play a fundamental role, providing support through interventions in the foreign exchange market,” Sengo concluded.
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