On Wednesday morning (28 October), the Governor of the Banco de Moçambique, Felisberto Navalha, delivered the opening address at the institution’s 51^st Advisory Board Meeting (CCBM) in Tete City.

The Governor began by acknowledging the particular significance of the occasion, as this was the first Advisory Board Meeting he had chaired as Governor of the Banco de Moçambique.

“I take on this responsibility with a commitment to preserving institutional memory and building on the collective work of the past five decades,” he underscored.

In his address, Felisberto Navalha reviewed the country’s macroeconomic and financial performance, the monetary and exchange rate policy stance over the past year, the main reforms implemented and under way, and the macroeconomic outlook for the short and medium term.

The Governor noted that economic growth remained moderate and insufficient to improve living standards. Following a contraction of 0.2% in 2025, the economy grew by only 1.7% in the second quarter of 2026, below its potential and the pace needed to meet the country’s poverty reduction objectives.

This recovery took place against an adverse external backdrop, marked by heightened geopolitical tensions in the Middle East and the resulting increases in international fuel and food prices and transport and logistics costs, with implications for economic activity and domestic inflation.

“Against this backdrop, we have maintained a prudent monetary policy stance. In March, we suspended the cycle of policy rate cuts and kept the MIMO rate at 9.25%,” the Governor said.

Moreover, he recalled that, in May, this measure was complemented by an increase in the reserve requirement ratio on domestic currency deposits from 29.0% to 39.0%, aimed at mopping up excess liquidity in the banking system and limiting pressure on domestic prices.

The Governor also noted that annual inflation had slowed to 6.31% in September, after rising from 4.41% in April to 7.51% in June following adjustments to liquid fuel prices.

Nevertheless, he stressed that monetary policy continued to face challenges. Rising public debt and the accumulation of government arrears were contributing to persistent rigidity in market interest rates and the concentration of bank liquidity in interbank money market instruments, limiting credit growth.

Against this backdrop, bank credit to the economy grew by only 0.5% year on year in September 2026.

The Governor affirmed that the financial system remained sound and resilient. In September, the banking sector’s capital adequacy and liquidity ratios stood at 29.0% and 55.5%, respectively, both above the regulatory minimums, while the non-performing loan ratio remained at around 7.0%.

He further noted that commercial banks’ foreign exchange purchases had reached USD 6.50 billion in the first nine months of the year, an increase of USD 859 million compared with the same period in 2025. Sales to customers reached USD 6.41 billion, an increase of USD 718 million.

At the same time, reported difficulties in accessing foreign exchange highlighted weaknesses in the functioning of the market and the distribution of available liquidity across the system.

Despite these challenges, the Governor said that the country maintained a reasonably comfortable level of international reserves, equivalent to approximately five months of imports of goods and services, excluding megaprojects.

“In order to address these challenges, we are implementing reforms to improve the functioning of markets and enable our financial system to better meet the country’s needs,” he said.

He highlighted changes to the reserve requirement framework aimed at increasing bank lending to projects that support import substitution and export diversification.

The changes take effect on 28 October and will remain in force for 18 months. During this period, commercial banks will be eligible for deductions from their domestic currency reserve requirements when they extend new loans to customers.

The initiative is supported by the Mutual Guarantee Fund to strengthen risk sharing and facilitate access to finance for eligible businesses, particularly micro, small and medium-sized enterprises.

In addition, the risk weight applied to loans guaranteed by the Mutual Guarantee Fund has been reduced.

In the foreign exchange market, reforms aim to improve market functioning and transparency, allowing available liquidity to circulate more efficiently. A centralised platform meeting international standards will become operational by December this year, enabling the Banco de Moçambique to monitor market activity in real time.

The Bank has also introduced the Centralised Monitoring System for the Use of Bank Cards Abroad. This system consolidates and disseminates information on each cardholder’s use of bank cards abroad, regardless of the issuing institution, strengthening market transparency and bringing Mozambique into line with international standards.

Turning to the payment system, the Governor highlighted the approval of the new National Payment System Law by the Assembly of the Republic. The law strengthens transparency in the disclosure of prices and fees, consumer protection, competition, innovation, oversight, and the security and reliability of transactions.

He also highlighted the launch of METIX, Mozambique’s first instant payment system, in March this year. Average daily transaction volumes have risen from around 3,000 at its launch to approximately 12,000 in October 2026, demonstrating growing adoption of the system.

On the Mozambique Sovereign Wealth Fund, the Governor said that the necessary arrangements had been put in place to manage its resources with a long-term perspective.

Following an initial capital injection of USD 110 million from natural gas revenues in December 2025, the Fund’s assets reached approximately USD 153 million by October 2026, of which USD 149 million represented capital.

The objective is to manage this wealth prudently and transparently, strengthening the country’s capacity to withstand shocks, supporting macroeconomic stability and preserving benefits for future generations.

On international reserves management, the Governor said that a work plan was being developed in coordination with the Ministry of Mineral Resources and Energy to put arrangements in place for purchasing domestically produced gold. This follows a trend among central banks, including those in the region, towards strengthening and diversifying their reserves.

Turning to financial inclusion, he said:

“Building on the progress made in expanding access to financial services through interoperability between banks and mobile money institutions and the growing use of digital payment solutions, we now intend to move beyond access towards more effective use of financial services that encourage saving and responsible access to credit, particularly in rural areas.”

On the Banco de Moçambique’s internal management and modernisation, the Governor highlighted the implementation of the Digital Transformation Strategy. The strategy aims to simplify processes, improve the quality and timeliness of information provision, strengthen risk management and make more efficient use of data.

It is being implemented alongside the Artificial Intelligence Policy, which sets out principles and guidelines for the responsible, secure and transparent use of this technology within the Bank, supported by ongoing assessment of the associated risks.

Looking ahead to 2027 and the medium term, the Governor said that the economy was expected to continue recovering at a moderate pace, supported by agriculture, the extractive industry and services.

He anticipated some upward pressure on inflation in the near term, followed by an easing over the medium term, albeit risks remained high.

On the domestic front, he highlighted uncertainty over the extent of imported inflation, developments in public debt and government arrears, and the impact of climate shocks, particularly El Niño.

Externally, he pointed to uncertainty over the duration and scale of the effects of geopolitical tensions in the Middle East and Europe on international trade flows, the global supply of goods, and international fuel and food prices.

The Governor stressed that, alongside monetary policy measures, fiscal consolidation, improvements to the business environment and other structural reforms remained essential to support a faster economic recovery and promote job creation.

“Consistent implementation of these reforms will be important to strengthen the credibility of economic policies, increase the confidence of investors and development partners, and improve conditions for mobilising external resources,” he added.

Felisberto Navalha also commended the knowledge, experience and sense of responsibility of all central bank staff, calling on them “to work together, through collective effort, rigour and institutional dialogue, to build a central bank with greater technical capacity and institutional credibility, and an increasing awareness of the economic realities behind the statistics”.

In closing, the Governor reaffirmed the institution’s commitment to maintaining price stability and promoting a sound, modern and inclusive financial system.

“We must therefore continue to consolidate our achievements, build on the progress under way and prepare the central bank to respond more effectively to the demands of an economy undergoing transformation towards economic independence,” he concluded.

The Advisory Board Meeting runs from 28 to 30 October. The first two days are scheduled for discussions on internal matters, while the final day is reserved for a public session on “Challenges and Opportunities in Harnessing Tete’s Energy Potential for Mozambique’s Energy Security”.

Participants in the 51st CCBM include members of the Board of Directors, managers and staff members of the Banco de Moçambique.