Mozambique – 97

Mozambique

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0 km 100 200 300 400 km CPI Inflation (annual %) 12.7 Long-Term Sovereign Ratings Exports of goods and services (% of GDP) 37.5 Long Local Foreign Term Currency Currency Gross Official Reserves (US $ bn) 1,114 Fitch B+ B Impor Cover (months) 4.2 UNDP HDI Ranking 168 S&P B B Source: AfDB, IMF, UNCTAD, UNDP, UN Population Division

1. overview of the Financial System The central bank, Banco de Mozambique (BDM), has institutions include one investment bank, three leasing independence in controlling money supply, inflation companies, five credit and savings co-operatives and targeting and supervision of banks amongst other a number of micro-finance institutions. functions. Monetary policy has been successful in The insurance and pension sectors are small. Even reducing inflation since 2005. with the recent privatisation efforts, the insurance market remains dominated by the state-owned Bank and Non-Bank Financial Sector insurer, which provides all types of insurance and As at the end of 2006, there were nine commercial reinsurance. The Ministry of Finance regulates the banks and they account for 90% of the system’s insurance sector. total assets. This number has significantly increased from 1992 when the liberalisation of the banking Capital Markets sector occurred. Before this time, Banco Standard The Bolsa de Valores de Moçambique (BVM), is the Totta de Moçambique (BSTM) was the country’s stock exchange, which opened in Maputo in 1999. only private bank. These nine banks are all foreign- There is one stock listed on the BVM, Cervejas de owned. Portuguese-owned Banco Internacional Moçambique, majority-owned by a foreign company. de Moçambique (BIM), accounts for 44% of total Trading on the exchange is conducted mainly by banking assets and owns 42% of total banking commercial banks. The BVM is a very small and system branches. The Government aims to privatise illiquid stock market. further by selling its stake in BIM. Other financial 98 – Mozambique

2. Fixed Income Markets are also available, with coupons linked to prevailing Government Securities rates for treasury bills. Government bonds have been in existence Treasury bills have maturities of 91-, 182- and 364- since 1999. In the first phase, the bonds will be days, as displayed in the graph below. reimbursed in three years at varied interest rates The following government and corporate bonds are and also adjusted to the re-discount rate of the listed on the exchange. central bank. Longer-term and floating-rate bonds

Stock Amount Bond Description Admitted to Volume (MZM billion) quotation Tesouro-2001/I – 1ª Série 2.338.000 176.720 17,672 Tesouro-2002 – 2ª Série 1.000.000 2.925 0,293 Tesouro-2004 2.500.000 50 0,005 Tesouro-2005 – 1ª Série 4.960.000 1.049.175 104,918 Tesouro-2005 – 2ª Série 300.000 - - Tesouro-2005 – 3ª Série 16.673.180 108.430 10.843 BIM 2003 650.000 - - BIM 2003 Subordinadas 850.000 - - TDM 2004 1.250.000 750 0,064 Cimentos de Moçambique/2004 1.983.333 222.850 17,828 MCEL 2005 3.360.000 10.000 1,000

3. Foreign Exchange MZM Per Unit of USD ( Until July 2006 )

The Mozambican Metical (MZM) is an independent, 28,000

freely floating currency. Access to foreign exchange 26,000 is greatly liberalized by the passage in 1996 of a 24,000 new Exchange Control Regulation Law. Foreign 22,000 exchange retention accounts are permitted for 20,000 100% of foreign exchange earnings, without formal 2001 2002 2003 2004 2005 2006 justification. Investment registration and repatriation Source: Bloomberg M application procedures must be adhered to in order to repay foreign loans and repatriate invested capital, profits, and dividends in excess of USD 5,000. Debt first quarter of 2007, the currency stood at MZN servicing requires an approval letter from the central 26.479 /1 USD. bank at the time of the loan. The Mozambican Metical was redenominated in July 4. investment Taxation 2006, taking three zeros off the existing currency The following taxes are applicable to investment value versus the U.S. dollar. The Mozambican “New income: corporate capital gains tax rate of 32%, Metical” (MZN) is MZM/1,000. withholding tax dividends of 20%, withholding tax The MZM has been on a depreciating trend since interest of 20%, and personal capital gains tax of December 2004, reaching MZM 26,170/1 USD at 32%. the end of December 2006. As at the end of the Mozambique – 99

5. Key contacts

• Banco de Moçambique Av. 25 de Setembro 1695, P.O. Box 423, Maputo, Mozambique Tel: +258-1-318000/9 Fax: +258-1-323712 E-mail: [email protected] Web: www.bancomoc.mz • Bolsa de Valores de Moçambique Avenida 25 de Setembro No. 1230, 5th Floor, Maputo, Mozambique E-mail: [email protected], [email protected]