Mozambique has 390 million meticais in stabilisation fund to help prevent a potential fuel price hike

Mozambique has 390 million meticais (≈€5.2 million) in the stabilisation fund to help prevent a potential rise in fuel prices due to the Middle East conflict, Finance Minister Carla Loveira said today. “This is a fund that has been used whenever crises of this nature occur, and we have already faced the Russia–Ukraine conflict, which required our country to utilise the stabilisation fund as a result of the significant increase in fuel prices. At present, the resources amount to around 390 million meticais,” the Mozambican Finance Minister said on the sidelines of the event marking Taxpayer Day in Maputo.

The minister explained that exercises continue to ensure the supply of fuel in Mozambique, including bank guarantees for petrol stations that import these products and the corresponding foreign currency needed to bring them into the country. Around 80% of Mozambique’s fuel imports transit through the Strait of Hormuz from the Middle East, with the minister adding that the government is studying the likely impacts of the Middle East conflict on the country, particularly regarding the cost of living, exchange rate, foreign currency availability, inflation, and fuel imports, while evaluating concrete actions to address these impacts. “The reflection, which is an ongoing task, continues to be carried out with the involvement of petrol stations and distributors, also with a view to verifying how much our country has invested for fuel coverage and how many days it allows for coverage, which in principle extends until March,” explained Carla Loveira.

The minister said this review also aims to reassess existing contracts to determine for how much additional time they allow fuel needs to be covered, while also analysing how long the stabilisation fund could maintain domestic fuel prices, in addition to the Government’s projections for a context in which prices are revised upwards. “For example, the revision of prices under the decree governing the adjustment of the fuel price table. Therefore, it is a possibility that is indeed being considered so that it can occur, in order to respond and align the petrol sector (…) to comply with the evolution of international fuel prices,” she clarified.

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Mozambique admitted the possibility of an extraordinary budget revision if the Gulf war intensifies and causes a widespread increase in oil prices, the Finance Minister said on 20 March. “In the most extreme, adverse scenario, a budget revision may indeed be necessary,” Carla Loveira stated. “Because the entire impact [of the war], through imported inflation, through the increase in fuel prices and its effect on rising costs, especially of the basic basket of food products, could determine an aggravation of public expenditure—not in quantitative terms, but in terms of value,” she explained.

On Tuesday, the Government assured that there are “no signs” indicating a potential rise in fuel prices due to the Middle East conflict, and expressed willingness to engage with sector stakeholders to mitigate economic impacts. READ:Mozambique government says no signs of fuel price hike

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