Mozambique's central bank tightened its monetary policy stance further in an effort to change the current trend of rising inflation and a falling exchange rate from the suspension of foreign aid, lower availability of foreign exchange due to lower exports, the impact of floods and droughts on food supply, military tensions in some regions and the downgrade of the country's credit rating.

Moody's Investors Service has downgraded Mozambique's issuer and senior unsecured debt ratings to Caa3 from Caa1, thereby concluding its review for downgrade initiated on 20 May 2016. The outlook is negative.

Mozambique's central bank raised its benchmark standing facility rate by another 150 basis points to 14.25 percent as it continues to tighten monetary conditions to contain rising inflation.

On May 27, 2016, S&P Global Ratings lowered its long- and short-term foreign currency sovereign credit ratings on the Republic of Mozambique to 'CCC/C' from 'B-/B'. At the same time, we affirmed our 'B-/B' long- and short-term local currency sovereign credit ratings. We have placed all our ratings on Mozambique on CreditWatch with negative implications.