Fuel shortages at filling stations in Mozambique are making it increasingly obvious that foreign currency is in short supply in the country, as the government prepares to advance relief measures.

The authorities say there is enough fuel in the country to cover consumers' needs for up to six months, but the fact is that it is becoming increasingly common to see queues of motorists trying to fill up at the pumps where there is fuel. But it's also now common to see tapes and cones cordoning off the pumps, a clear sign of drought.

Official foreign exchange reserves recovered in 2023, after the Central Bank stopped supplying dollars directly to cover fuel imports, and are well above the International Monetary Fund's indicative target.

However, the trade deficit points to continued pressure. The country imported 164 million dollars more goods than it exported last year, with natural gas coming close to coal as the biggest export by value, at around 2 billion dollars each.

This month Mozambique approved a 7.2 billion dollar plan for a second floating liquefied natural gas production platform, from which the government hopes to reap 23 billion dollars over two and a half decades.

Those revenues are years away: The vessel won't produce gas until at least 2028. And a larger LNG export project worth 20 billion dollars, led by TotalEnergies SE, is still on hold.

Meanwhile, the delays in IMF funding and the reduction in aid flows from the United States will further tighten the supply of dollars. (Source: moneyweb)