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9
Counselor to the UIA President
Member of Mozambique Bar Association
t
31.10.2015
h
UIA Investment Commission
SLIDE 1
THE FOREIGN EXCHANGE
LEGISLATION IN MOZAMBIQUE
SLIDE 2
In 2014, Mozambique’s economy continued to perform strongly with
real Gross Domestic Product (GDP) growth of 7.6% and the outlook
remains positive.
Sustained growth is expected
at 287.5%
in 1,2015
October
- November
2015 and 8.1% in 2016,
primarily driven by continued investment in mega-projects and
infrastructure.
As in previous years, the main drivers of growth will continue to be
public expenditure and Foreign Direct Investment (FDI). The main
sectors benefiting are construction, services to enterprises, transport
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C
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n
g
r
e
s
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and communications, the financial sector and extractive industries. In
the short term, the main challenge is to remain attractive in terms of
FDI, while ensuring fiscal and debt sustainability. Consecutive high
fiscal deficits, reaching 10.0% of GDP in 2014, have pushed public
debt to 56.8% of GDP. A progressive fiscal consolidation for 2015 and
2016 is expected, accommodating also for a decrease in donor
budgetary funding.
SLIDE 3
Along this line, the “booming economy of Mozambique has become an
attractive
economy for investors and
entrepreneurs and
the
liberalization of exchange controls has an important role to play on the
axis of "business facilitator”.
SLIDE 4
The liberalisation of exchange controls has the capability of enhancing
valences in the set of distinctive assets of Mozambique economy.
In the last few years Mozambique has undertaken a complete
overhaul of its exchange control regime with the objective of promotion
the free movement of goods, capital, services, and people.
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On 11 March 2009 it enacted a new Foreign Exchange Law (in force
on 11 July 2011) intended to reinforce the liberalization of existing
operations by eliminating the constraints applicable to payment
transfers between residents and non-residents. The new Law is likely
to provide foreign and local investors with more opportunities and
flexibility in structuring cross-border transactions and investments.
SLIDE 5
The Foreign Exchange Act
The Act 11/2009 of March 11 (“Lei Cambial”/Foreign Exchange Act)
governs acts, deals, transactions and operations of all kinds:
(i) taking place between residents and non-residents and resulting or
may result in payments to or receipts from foreign countries or;
(ii) that are classified as foreign-exchange transactions by law.
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SLIDE 6
The Foreign Exchange Act applies:
(i) to currency transactions conducted by non-residents, provided they
relate to goods or securities located in Mozambican territory and to
rights to such goods or monetary instruments or refer to activities
undertaken in Mozambique;
(ii) to currency operations performed by residents when they relate to
goods, monetary instruments or rights acquired located or generated
abroad which are subject to a legal obligation of repatriation; and
(iii) to goods and monetary instruments located in Mozambican territory
or rights to such goods or monetary instruments.
The Foreign Exchange Act also applies to foreign exchange
transactions related to foreign investment.
For the purposes of the Foreign Exchange Act, services rendered, the
transfer of rights and of goods encumbered or sold, when located,
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produced, used or operated in the country are deemed to be activities
carried on in Mozambique.
SLIDE 7
In applying the Foreign Exchange Act, it is essential to make a
distinction between forex residents and forex non-residents, and what
foreign-currency transactions are allowed within its scope.
Thus, the following are considered resident Mozambique:
(i) Mozambicans residing in Mozambique or whose stay abroad does
not exceed one year;
(ii) Mozambicans whose stay abroad for a period equal to or greater
than one year is for health or study reasons;
(iii) all foreign nationals living in Mozambique for over a year, excluding
diplomats,
consular
representatives
or
similar,
foreign
military
personnel performing governmental duties in the country, as well as
members of their families;
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(iv) private-law corporate persons having their registered office in
Mozambique;
(v) public-law corporate entities;
(vi) Mozambican citizens who are diplomats, consular representatives
or similar, military personnel performing governmental duties abroad,
as well as members of their families; and
(vii)
the
affiliates,
agencies,
delegations
and
commercial
representations of non-resident private business entities, legally
represented in Mozambique.
SLIDE 8
Foreign-exchange transactions
All foreign-exchange transactions are subject to registration, but not all
require the prior authorisation of the Bank of Mozambique, as in the
case
of
foreign-exchange
transactions
classified
as
current
transactions.
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The following foreign-exchange transactions require the prior approval
of the Bank of Mozambique:
(i) acquisition and sale of gold and silver coin;
(ii) export of gold, silver, platinum and other precious metals in bar,
ingot or in other not-worked form;
(iii) opening and using accounts by non-residents in domestic currency,
when related with capital transactions;
(iv) opening and using accounts in foreign currency or in units of
account used in international settlements or payments;
(v) granting credit to residents in foreign currency, including by means
of discounting bills, promissory notes, invoice statements, expressed or
payable in domestic or foreign currency, where one of the parties is a
non-resident;
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SLIDE 9
(vi) purchase and sale of foreign credit securities;
(vii) transactions denominated in foreign currency in units of account
that involve or may involve total or partial settlement of capital
transactions carried out between residents and non-residents;
(viii)
transactions denominated in domestic currency in units of
account that involve or may involve total or partial settlement of capital
transactions carried out between residents and non-residents;
(ix) transfer to and receipt from abroad of monetary instruments or
means of payment;
(x) exchange-rate arbitrage; and
(xi) import, export or re-export of foreign currency or other means of
payment as well as bills of exchange, promissory notes and invoice
statements, shares or bonds, whether domestic or foreign, or coupons
and public debt securities.
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SLIDE 10
Capital transactions
Capital transactions that require prior authorisation of the Bank of
Mozambique include the following:
(i) foreign direct investment;
(ii) real-estate investment;
(iii) transactions involving participation units of collective investment
undertakings;
(iv) opening and using bank accounts with financial institutions abroad;
(v) credits related to the transaction of goods or provision of services;
(vi) financial loans and credits;
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(vii) guarantees;
(viii) transfers in execution of insurance contracts;
(ix) transactions on securities and other instruments traded on the
money and capital markets;
(x) physical import and export of monetary instruments; and
(xi) personal loans.
Current transactions
Current transactions (not currently subject to prior authorisation by the
Bank of Mozambique, but only to registration with commercial banks)
include any payments or receipts in foreign currency that are not for
the purpose of transfer of capital, including payments due in
connection with foreign trade, remittances for family expenses and
other current obligations, under the terms of the respective regulations:
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The Bank of Mozambique establishes a table of classification of
foreign-exchange transactions, as well as a detailed classification of
current transactions.
SLIDE 11
According to the Foreign-Exchange Act Regulation (“Regulamento da
Lei Cambial”) the following are current transactions:
(i) payments for imports of goods and services;
(ii) revenues relating to export of goods and services or rental or use of
industrial and intellectual property rights;
(iii) transfers abroad of the income generated by capital transactions
previously approved by the Bank of Mozambique (including dividends
from foreign direct investment, interest, dividends and other capital
gains on portfolio investment, interest on loans, including shareholders’
loans, income from other forms of capital investment); and
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(iv) transfers made unilaterally, without any consideration, such as
donations of money, alimony or family expenses.
For each current transaction to be made by entities authorised to
conduct foreign-exchange business certain procedures must be
followed and specific documents provided, the said entities being
charged with the control of transactions of this type. Banks, exchange
bureaux, travel agencies, hotels and similar establishments, and other
entities that come to be defined by law are authorised to carry on
foreign-exchange trade.
General principles and duties
The Foreign Exchange Act Regulation establishes the rules and
procedures to be followed in carrying on foreign-exchange acts, deals,
transactions and operations under the Foreign Exchange Act.
All foreign-exchange transactions (that is, capital operations and
current transactions) are subject to registration:
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(i) with the Bank of Mozambique, in the case of transactions subject to
its prior authorisation, already approved, and;
(ii) with the credit institutions and financial companies, for transactions
they carry out that do not require prior approval of the Bank of
Mozambique.
SLIDE 12
The foreign-exchange registration procedure includes:
(i) collecting all information about the foreign-exchange transaction,
including the identity of the parties, the nature, amount, purpose and
legitimacy of the transaction;
(ii) electronic or manual processing of the information;
(iii) the filling of copies of supporting documents, and;
(iv) the issue of the Foreign Exchange Registration Bulletin (“Boletim
de Registo Cambial”).
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SLIDE 13
Brief Conclusion
Mozambique seeks through this exchange control framework to
reinforce the liberalisation of existing operations.
The Foreign Exchange Law and proposed Regulation are likely to
provide foreign and local investments, and over the medium-term the
continued challenge is the achievement of an inclusive growth model
and the diversification of the economy.
The liberalization of exchange controls therefore contributes to the
promotion of Mozambique's competitiveness and economy, increasing
and strengthening the level of financial development of the country.
THANK YOU!!!
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