Last Friday (2 October), the Banco de Moçambique (BM) and the Confederation of Economic Associations of Mozambique (CTA) held an MPC+1 session at the central bank's premises, providing a platform for dialogue between the central bank and the private sector.

The meeting provided an opportunity for the BM to share its assessment of economic developments and, above all, to hear directly from private-sector representatives about the main constraints affecting business activity.

The session was chaired by BM Board Member responsible for Monetary Stability, Maria Esperança Majimeja, and attended by BM managers and technical staff, as well as CTA representatives, including Bilal Sidat, President of the Monetary Policy and Financial Services Committee, and Kekobad Patel, President of the Fiscal Policy, Customs and International Trade Committee.

New reserve requirement regime at the centre of discussions

Discussions focused on the new temporary reserve requirement regime recently adopted by the Monetary Policy Committee (MPC) with the aim of creating conditions for increased financing to productive activities.

Under the new regime, which will remain in effect for 18 months, banks will be allowed to deduct from their local currency reserve requirements amounts equivalent to new lending to private-sector firms that support import substitution and/or export growth. The measure will also be supported by the Mutual Guarantee Fund.

For financing intended for investment and the expansion of productive capacity, the applicable interest rate will be the MIMO rate, currently at 9.25%, with a reserve-requirement deduction ratio of 110%. For working-capital financing related to production, the applicable rate will be the MIMO rate plus 150 basis points, equivalent to 10.75%, with a deduction ratio of 100%.

The regime will be implemented through a Notice to be issued by Banco de Moçambique and published soon.

CTA raises questions about access and scope

CTA welcomed the MPC+1 session, describing it as a particularly relevant forum for dialogue on financing conditions in the economy.

During discussions on the new regime, private-sector representatives stressed the need for clear eligibility criteria to provide greater predictability for businesses and financial institutions. They also highlighted the importance of ensuring access for small and medium-sized enterprises in the provinces and of encouraging banks to publish periodic information on lending extended under the scheme.

Another issue raised was commercial banks’ risk appetite, with participants noting that this could influence the effectiveness of the new mechanism for financing the private sector.

CTA also expressed its willingness to disseminate information about the new regime among businesses, helping the private sector understand and assess the opportunities created by the measure. Finally, the confederation highlighted that the introduction of the new reserve requirement regime underscores the importance of bringing monetary policy measures closer to the economy’s actual financing needs.