Mozambican economists said yesterday that the central bank’s decision to stop participating in the fuel import bill is a sign that its reserves are at the “limit” and that it intends to curb the balance of payments deficit.“The country is using reserves to maintain the exchange rate and, at the moment, the central bank can no longer do that, we are at the limit of our reserves,” said Estrela Charles, economist and researcher at the Centre for Public Integrity (CIP).Charles pointed out that the volume of reserves currently held by the central bank covers a maximum of three months of imports and that it cannot be allowed to fall below this level.“The central bank started the year 2022 with sufficient net international reserves for six months’-worth of imports [of goods and services],” she adds, but between the end of 2022 and the beginning of 2023, it ended up left with resources able to support three months of imports at most.Estrela Charles says that the Mozambican financial regulator understands that there is a lot of currency in circulation in the Mozambican foreign exchange market, enough in fact to finance the import of fuel without the need for a contribution from the authorities.She warned, however, of the risk of commercial banks running out of currency and putting pressure on exchange rates, if the decision is not accompanied by “other auxiliary measures”.For his part, economist Elcidio Bachita argues that the Bank of Mozambique’s decision showed that it wants to prioritise the use of its assets in financing other activities, leaving support for fuel imports to the market.“On the one hand, this has to do with the government’s position in the sense of letting the market regulate what is the price of fuel in Mozambique, but, on the other hand, the Bank of Mozambique does not want to see itself in a position where it is using net international reserves for fuel import costs,” Bachita highlighted. (ICE MAPUTO)

Fonte notizia: LUSA