Approval of exchange rate and prudential regulatory instruments by the Bank of Mozambique

On April 2, 2025, the Bank of Mozambique issued notices no. 1/GBM/2025, no. 2/GBM/2025, no. 3/GBM/2025, regarding the exceptional regime for the repatriation and conversion of revenue from the export of goods, services and investment income abroad; the revision of the regime for the repatriation and conversion of revenue from the re-export of oil products; and the establishment of an exceptional regime regarding the percentages of minimum regulatory provisions on overdue credit, respectively.

These initiatives come at a time when it is necessary to respond to the lack of foreign currency, boosting the use of the national currency and strengthening the role of local banks as intermediaries in foreign exchange transactions.

 1.    NOTICE NO. 1/GBM/2025 - EXCEPCIONAL SCHEME FOR THE REPATRIATION AND CONVERSION OF EXPORT EARNINGS FROM GOODS, SERVICES AND INVESTMENT INCOME ABROAD

1.1    Background

This notice establishes the exceptional regime for the repatriation and conversion of revenue from the export of goods, services and investment income abroad enshrined in notice no. 5/GBM/2024 of 21 March, with a view to minimizing the effects of the current socio-economic scenario.This exceptional regime is a response to the need to strengthen the local economy, liquidity in national currency and control capital flows abroad.

1.2    Scope

The notice applies to all parties involved in foreign exchange transactions carried out under the Foreign Exchange Law.

1.3    Conversion of revenuePursuant to notice no. 5/GBM/2024, of March 21, 30% of revenue from the export of goods, services and income from investments abroad has to be converted into national currency, and the conversion has to be carried out at the time of receipt, at the spot exchange rate in force. Exceptionally, and in the light of notice no. 1/GBM/2025, for a period of 18 months as of the date of entry into force of this notice, the rate of conversion of revenue will be 50% of the amount received. notice no. 5/GBM/2024 remains in force in all other aspects.

1.4    Entry into forceThis notice entered into force on April 9, 2025.

2.    NOTICE NO. 2/GBM/2025- REVISION OF THE RE-EXPORT REGIME AND CONVERSION OF REVENUE FROM THE RE-EXPORT OF PETROLEUM PRODUCTS 

This notice is a response to the need to adapt the country's foreign exchange policies to international dynamics in the petroleum products sector. The purpose of the notice is to establish a system for the repatriation and conversion of revenue from the re-export of petroleum products.It also allows intermediary banks to manage foreign exchange for the re-export of oil products more flexibly

2.1    Scope of applicationThe notice applies to:•    Entities re-exporting petroleum products; and•    Intermediary re-export banks.

2.2    Payments for the re-export of petroleum productsUnder the terms of this notice, payments related to the re-export of petroleum products must not be made through the sale of foreign currency by the national banking system, and therefore entities re-exporting petroleum products must make international payments using alternative sources of foreign currency, such as their own export revenues, direct negotiations with foreign suppliers or external credit lines, without resorting to the sale of foreign currency on the national foreign exchange market.

2.3    Repatriation and conversion of revenue from the re-export of oil productsIt is also stated that:•    Organizations that re-export petroleum products must repatriate the re-export revenues, by bank transfer, within 30 days of the date of shipment;•    Revenues from the re-export of petroleum products must be converted by the intermediary bank into national currency and into the total value of the re-export received;•    Re-export revenues must also be converted at the time of receipt at the spot exchange rate.

2.4    Entry into forceThis notice entered into force on April 9, 2025.

3.    NOTICE NO. 3/GBM/2025 - EXCEPTIONAL REGIME FOR MINIMUM REGULATORY PROVISIONS

This notice establishes the exceptional regime regarding the percentages of minimum regulatory provisions on overdue credit.The minimum regulatory provisions apply to credit institutions and financial companies in accordance with the provisions of notice no. 16/GBM/2013.It should be noted that the regime provided for in notice no. 3/GBM/2025 is exceptional and transitional in nature and will be in force for a period of 12 months as of the date the notice comes into force.

3.1    Scope The notice applies to all credit institutions and financial companies subject to supervision by the Bank of Mozambique.

3.2    Exceptional regime of minimum percentages of provisions for overdue loans

The notice maintained the description of loans in notice no. 16/GBM/2013 but changed some percentages for some risk classes.  

For credit agreements maturing within 30 days, the minimum provision percentage was reduced by half.This means that, where the minimum percentages of provisions was 2%, it is now 1%, and where it was 5%, it has been lowered to 2.5%.

Looking at risk classes II and III, which correspond to maturities of between 31 and 90 days, and between 91 and 180 days respectively, you can see that the pattern was the same. In other words, the percentage of minimum provision on outstanding balances halved. 

However, for credit agreements maturing between 181 and 360 days, there was a reduction in the provision corresponding to only a quarter of the initial percentage. In other words, for credit agreements with a minimum provision percentage of 50, it fell to 37.5, for those with a minimum provision percentage of 60, it fell to 45, and so on.

Finally, looking at risk class V, which corresponds to maturity of more than 360 days, it can be seen that there has been no reduction, which means that the regime will remain the same as provided for in notice no. 16/GBM/2013.

3.3    Entry into forceThe notice came into force on April 9, 2025.

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