Mozambique: MSMEs contribute 23.4% to the GDP
Image: Banco de Moçambique
Foreign citizens can now invest up to US$1 million in Mozambique without prior central bank authorization. The Bank of Mozambique’s goal in the new Foreign Exchange Law is to eliminate barriers to foreign direct investment and boost the foreign exchange market.
The Bank of Mozambique recently announced the removal of barriers to foreign investment and investments by residents abroad, including international trade, increasing the annual limit to US$1 million without the need for prior authorization.
In information provided in Maputo on Tuesday (18-06), the central bank explained that the changes result from new exchange rate regulations, already in force since the publication of Notice No.4/GBM/2024, which removes barriers to foreign investment in Mozambique and investments by residents abroad, as well as facilitating international trade, and which can be summarised as creating mechanisms to make exchange rate operations more flexible through the gradual liberalisation of the capital account.
The Administrator of the Financial Services Department of the Bank of Mozambique, Maria Majimeja clarified that “in Foreign Direct Investment, 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 applied without prior authorization from the Bank of Mozambique increased from the previous 15.8 million meticais (US$250,000) to 63.2 million meticais (US$1 million) annually”.
The central bank also established 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, without, however, calling into question the commitments already undertaken in this matter.
READ: Mozambique: Central bank announces ‘removal of barriers’ to investment, trade
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, Other Foreign Exchange Operations and the Repatriation and Conversion of Revenue from the Export of Goods, Services and Income of Foreign Investments.
The objective is to achieve greater speed in carrying out foreign exchange operations, guarantee a greater inflow of external capital and greater availability of currency, in addition to promoting the appreciation of the national currency and a stable, dynamic and robust foreign exchange market.
Notices from the governor
With the new regulations approved and presented this week, the central bank explains that it also intends to legitimise its intervention and role, as an exchange rate authority, to assign clear powers in exchange rate matters and guarantee the timeliness of exchange rate regulation, which will from now on will be done “through notices from the [central bank] governor”, given “that exchange rate matters are quite dynamic and require permanent and timely intervention from the authority in order to correct any anomalous situation that could distort the functioning of the market.
Among the various changes made by the Bank of Mozambique to the current foreign exchange regulatory framework, 13 stand out as having an impact on the relationship between commercial banks and their customers.
In the same context, the Bank of Mozambique presented the Economic Situation and Perspectives Report for 2024, which points to the maintenance of global economic growth at 2023 levels.
In terms of prospects, the Bank of Mozambique indicates that inflation will remain at single digits in the medium term, which means greater stability of the Metical and the positive impact of the measures taken by the CPMO.
Regarding economic growth, it is expected that, in the medium term, economic activity, excluding the production of Liquefied Natural Gas (LNG), will continue to recover, despite uncertainties regarding the impacts of climate shocks on agricultural production and various infrastructures.
Pressure on domestic public debt remains high. Domestic public debt, excluding loan and lease contracts and outstanding liabilities, stands at 344.0 billion meticais, which represents an increase of 31.7 billion meticais compared to December, 2023.
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