Mozambique’s economy reduces demand for external financing in 2023

According to official data seen by Lusa this Thursday, Mozambique’s economy has reduced demand for external savings to finance consumption and financial needs by 72.3% in 2023, while the current account and capital account balances have contracted.

The balance, reflecting domestic absorption, fell to $1.782 million (€1.655 million), according to preliminary data from the Bank of Mozambique’s 2023 balance of payments report. Net external financing requirements are measured by the combined current and capital account balances, and as a percentage of gross domestic product (GDP), according to the central bank, it stands at 26.4 percentage points, rising from 35% in 2022 to 8 ,6. %, in 2023.

“Essentially, this result was driven by a 67.7% reduction in the current account deficit,” amounting to $2.224 million (€2.066 million), equivalent to 10.8% of GDP.

The report also states that the reduction in the current account deficit “mainly reflects an 82.1% reduction in the negative trade account balance, justified by a 76% decline in imports of goods by large project companies compared to 2022,” amounting to $1,307.2 million (€1,214 million).

The improvement in the current account deficit also resulted from a “46.4% contraction in the service account balance” totaling $786.5 million (€731 million), equivalent to 3.8% of GDP, “reflecting, on the one hand, an increase in net transport revenues by more than 100% and, on the other hand, a decrease in the number of contracts for technical assistance services, especially for large projects.”

“In addition, current net transfers recorded a surplus” of nearly $1.303 million (€1.211 million), up 22.4% from 2022, “justified by increased net receipts from the private sector.”