Mozambique: Central bank announces ‘removal of barriers’ to investment, trade

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Mozambique: Central bank announces ‘removal of barriers’ to investment, trade

7:47 CAT | 18 Jun 2024

Image. Banco de Moçambique

The Bank of Mozambique has announced the “removal of barriers” to foreign investment and investments by residents abroad, and to international trade, increasing to $1 million (€932,000) the annual limit for investment without the need for prior authorisation.

In information provided in Maputo today, the central bank explained that the changes result from “new exchange rate regulations” already in force, to “remove barriers to foreign investment in Mozambique and investments by residents abroad, as well as facilitating international trade, which is summarised in the creation of mechanisms to make exchange rate operations more flexible through the gradual liberalisation of the capital account”.

By way of example, the Bank of Mozambique explains that, in operations concerning Foreign Direct Investment, Investment Abroad, operations on certificates of participation in collective investment organisations and operations on securities and other instruments traded in the capital market outside the stock exchange in Mozambique, the amounts “that can be carried out without prior authorization from the Bank of Mozambique” increased from the previous 250,000 dollars to one million dollars annually.

“The obligation to make payments in national currency in all domestic transactions in the country” and the “harmonisation of the various special exchange rate regimes in force, within the scope of mining and hydrocarbon exploration projects in the country, without, however, jeopardising the commitments already made in this matter,” is also established.

At issue are changes to the Foreign Exchange Law, in the legislation on standards and procedures to be observed when carrying out foreign exchange operations and in the regimes for the Liberalisation of Capital Operations and Other Foreign Exchange Operations and the Repatriation and Conversion of Revenues from the Export of Goods, Services and Income from Foreign Investments.

The objective, according to the Bank of Mozambique, is to achieve “greater speed in carrying out foreign exchange operations”, guarantee “greater inflow of external capital” and “greater availability of foreign exchange”, in addition to promoting the “valuation of the national currency” and a “stable, dynamic and robust foreign exchange market”.

With the new regulations approved and presented today, the central bank also states that it intends to “legitimise the intervention and role of the Bank of Mozambique”, as “exchange rate authority”, to “attribute clear powers in exchange rate matters” and “guarantee timely exchange rate regulation”, which is now to be carried out “through notices from the governor”, given “that exchange rate matters are quite dynamic and require permanent and timely intervention from the authority in order to be able to correct any anomalous situation that could distort the functioning of the market”.

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