Mozambique’s foreign exchange crisis: central bank overrides commercial banks in the health sector

Last week, during a meeting with the Minister of Health, Ussene Hilário Isse, importers unable to acquire medicines, equipment and surgical materials due to a lack of foreign currency in commercial banks were instructed to submit all documentation including invoices to the Central Medical Stores. This institution, through its foreign currency account held at the Bank of Mozambique, will be able to make direct payments to international suppliers, most of whom are based in India.

This solution, which bypasses the commercial banking system, marks a rupture in the normal operation of Mozambique’s financial structure. It places the central bank in an operational role of payment execution traditionally reserved for commercial banks. The central bank claims it lacks the reserves to supply commercial banks and therefore will handle payments directly with suppliers, an approach that worries importers and could severely disrupt the existing system.

The shortage of dollars in the domestic market is creating profound obstacles for pharmaceutical operators, who report sharp declines in imports during the first quarter of 2025. The Mozambican Association of Importers and Producers of Medicines (AIPROMEM) has warned that if the situation continues, both the public and private health sectors could face a complete medicine shortage.

In an interview with TORRE.News, Mariamo Aly Hassane, president of AIPROMEM, revealed that international suppliers are still delivering medicine based on 90-day credit terms, but that arrangement is in jeopardy. “If this situation persists in the coming months, this year and next, we will not have any medicine in the country. The situation is critical and we must recognise it,” she said.

According to Hassane, even though some banks are attempting to prioritise medicine imports by breaking down invoices into instalments, the lack of commitment terms is jeopardising the entire process. “At the moment, banks are not issuing commitment terms. Even post-paid imports are facing difficulties at customs due to the absence of these documents,” she noted.

AIPROMEM reports that commercial banks are reluctant to issue such terms because they are unable to guarantee payment within the 90-day deadline agreed with suppliers. In some cases, banks only issue commitment terms on the condition that importers will not apply pressure if the banks fail to meet the payment deadlines, a practice that highlights the dysfunctionality of the current system.

However, the foreign exchange crisis is not confined to the health sector. The entire national economy is under pressure. Economist Egas Daniel told TORRE.News that the Bank of Mozambique is resorting to mechanisms that distort normal market functioning and warned that this approach could have serious consequences for exchange rate stability. “The exchange rate, for example, is being managed through regulatory pressure. Control could be lost and economic variables could reach unsustainable levels. This is the risk of the central bank manipulating variables without respecting market fundamentals,” he explained.

Daniel added that commercial banks are currently operating under tight scrutiny, including frequent inspections ordered by the central bank. “Fear has become a tool of monetary policy. The case of Standard Bank, which in 2021 was banned from participating in the interbank market, is a clear example of the bold regulatory stance we are now witnessing,” he said.

The Confederation of Economic Associations (CTA), which has repeatedly clashed with the central bank, has publicly warned that anti-inflationary measures are worsening the foreign exchange shortage. Commercial banks report a cumulative backlog of around USD 500 million in unpaid import invoices, capital repatriation and other cross-border operations.

The effects are clear: a decline in production and turnover, stalled projects, rising operational costs and a retreat in private investment. The shortage of foreign currency is making it increasingly difficult to pay for imports and is directly threatening the sustainability of strategic sectors such as health, which cannot afford delays.