Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

MOZAMBIQUE

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of January 31, 2005)

Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Mozambique is the Mozambican metical.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe Bank of Mozambique (BM) sets the official rate on a daily basis, and adjusts this rate and intervenes in the foreign exchange market when the weighted average selling rate of commercial banks and exchange bureaus deviates significantly from the daily rate announced in the immediately preceding days. The commercial banks and exchange bureaus, which participate in the market, buy and sell foreign exchange from and to individual customers at freely negotiated rates. The foreign exchange market is cleared twice daily through telex and telephone transactions. There is also an interbank money market as well as an interdealer market in foreign exchange outside the fixing sessions. Effective January 11, 2005, foreign exchange auctions are held every Tuesday.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsThe metical may not be used for transactions abroad.
Controls on the use of domestic currency
For current transactions and paymentsYes.
For capital transactions
Transactions in capital and money market instrumentsYes.
Transactions in derivatives and other instrumentsYes.
Credit operationsYes.
Use of foreign exchange among residentsThe use of foreign currency by residents in domestic transactions is common, although not encouraged.
Payments arrangementsNo.
Administration of controlThe BM is responsible for foreign exchange policy and administers its control.
International security restrictionsNo.
Payments arrears
PrivateIn exceptional cases, some private sector payments arrears can be rescheduled, subject to an agreement with the creditor and BM approval.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents other than monetary authorities are permitted to hold gold for numismatic purposes or as jewelry or ornaments.
Controls on external tradeThe exportation of gold is governed by special regulations, while the same regulations that apply to other import items are applicable to the importation of nonmonetary gold.
Controls on exports and imports of banknotes
On exports
Domestic currencyExports of domestic currency are subject to a limit of Mt 500,000.
Foreign currencyNonresidents may export foreign banknotes up to the equivalent of $5,000 and, above that, up to the amount they declared on entry.
On imports
Domestic currencyImports of domestic currency are subject to a limit of Mt 500,000, provided they had been previously exported.
Foreign currencyImports of foreign currencies in excess of the equivalent of $5,000 must be declared.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadJuridical persons must report the opening of such accounts to the BM.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsThese accounts may be opened only with funds from the conversion of foreign currency or from employment and technical assistance contracts approved by the appropriate institutions.
Convertible into foreign currencyThis is permitted only for funds whose origin has been proven; prior approval is required. Transfers of such funds abroad are permitted once the origin of the funds has been proven.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsDocumentary proof of the arrival of goods must be presented.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementsYes.
Preshipment inspectionThere is a list of goods that are subject to preshipment inspection.
Import licenses and other nontariff measuresAll imports must be registered with customs. A single-document import procedure is required.
Negative listA negative product list exists for imports financed by donors’ or creditors’ funds. The recipients of the funds are responsible for procuring the products themselves. Some import support funds are allocated by the BM to commercial banks.
Open general licensesSingle licenses are issued.
Import taxes and/or tariffsSugar imports are subject to a variable surcharge.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsAll export proceeds, except in cases authorized by the BM, must be collected through commercial banks.
Financing requirementsNo.
Documentation requirements
DomiciliationYes.
Preshipment inspectionInspection is performed only at the request of an importer.
OtherYes.
Export licensesAll exports must be registered with customs. A single-document export clearance is required.
Export taxesExports of raw cashew nuts are subject to a variable overvaluation tax.
Taxes collected through the exchange systemYes.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersCommercial banks are authorized to sell foreign exchange up to the equivalent of $5,000 for the payment of all types of invisible transactions and current transfers, except for profits and dividends from investments. Operations exceeding the limits and those relating to profits and dividends are subject to prior approval of the BM. Exchange bureaus are authorized to sell foreign exchange up to the equivalent of $5,000 to individuals to pay expenses associated with travel, study, or medical treatment abroad, as well as for film rental, expenses for fairs and exhibitions, contributions to international organizations, and subscriptions to publications.
Trade-related payments
Prior approvalYes.
Quantitative limitsYes.
Investment-related paymentsRemittances of profits and dividends from foreign direct investment may be made in accordance with the specific project authorization.
Prior approvalYes.
Quantitative limitsYes.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Personal payments
Prior approvalYes.
Quantitative limitsYes.
Foreign workers’ wagesForeign experts working in Mozambique may remit abroad all or part of their salaries, depending on the terms of their employment contracts.
Prior approvalYes.
Quantitative limitsYes.
Credit card use abroad
Indicative limits/bona fide testYes.
Other payments
Prior approvalYes.
Quantitative limitsYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsCertain Mozambican nationals working abroad under officially arranged contracts (specifically, miners in South Africa) are obliged to remit 60% of their earnings through the BM and to convert them into meticais.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsControls apply to all capital transactions.
Controls on capital and money market instruments
On capital market securitiesYes.
On money market instrumentsYes.
On collective investment securitiesYes.
Controls on derivatives and other instrumentsYes.
Controls on credit operationsPublic and private enterprises need BM approval to borrow abroad. All foreign borrowing must be registered with the BM. Borrowing by the government must be obtained on concessional terms.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentForeign investors are guaranteed the right to repatriate their initial capital. The incentives for foreign investments include tax and customs exemptions for specified periods and for access to domestic credit. Foreign investment proposals are processed by the Investment Promotion Center. Foreign investors may remit profits and dividends from their investments.
Controls on liquidation of direct investmentYes.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsNonresidents are prohibited from purchasing real estate from the government.
Sale locally by nonresidentsYes.
Controls on personal capital transactions
Loans
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Settlement of debts abroad by immigrants
Transfer of assets
Transfer abroad by emigrantsYes.
Transfer into the country by immigrantsYes.
Transfer of gambling and prize earningsEarnings from gambling are fully transferable, provided they are confirmed by the casinos, in accordance with a special permanent authorization granted to the casinos by the BM.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadNo prior approval is required, but the borrowing must be registered at the BM.
Lending to nonresidents (financial or commercial credits)Yes.
Lending locally in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsA reserve requirement of 11.5% applies to deposits in both domestic and foreign currencies.
Liquid asset requirementsYes.
Credit controlsYes.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsLimits are set as a percentage of core capital.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidentsPrior BM approval is required.
Limits (max.) on investment portfolio held abroadPrior BM approval is required.
Limits (min.) on investment portfolio held locallyPrior BM approval is required.
Currency-matching regulations on assets/liabilities compositionYes.
Other controls imposed by securities lawsn.r.
Changes During 2004
No significant changes occurred in the exchange and trade system.
Changes During 2005
Exchange arrangementJanuary 11. Foreign exchange auctions were scheduled to take place every Tuesday.

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