fbpx

Mozambique Limits Money Leaving The Country

Mozambique Limits Money Leaving The Country

Mozambique’s currency plunge made it Africa’s second-worst performer in 2015, and the government wants to slow the flow of foreign-exchange out of the country by limiting what citizens can spend abroad on credit and debit cards.

Huge amounts of money are leaving Mozambique through unrestrained use of credit and debit cards abroad, Mozambique’s central bank governor said in November. He promised measures intended to stabilize the currency and reverse the depreciation.

The Bank of Mozambique also plans to strengthen banking supervision.

Citizens using credit and debit cards abroad will be limited to spending 700,000 meticals ($13,600) a year in an effort to curb foreign-exchange outflows amid a slump in commodity prices, Bloomberg reports.

The metical has dropped 37 percent again the dollar in 2015 and a cap on spending is needed as depressed commodity prices strain the economy, said Mozambique Central Bank Governor Ernesto Gove.

Transactions through credit and debit cards abroad increased from US$300 million in 2012 to US$800 million in 2014, Gove said, according to MacauHub.

Gove described Mozambique’s economy as an “exceptional situation…which implies a change of consumption habits and the import model.”

The metical’s depreciation contributed to a shortage of foreign currency in the market although the Bank of Mozambique gave assurances it would be able to cover more than three months of imports, MacauHub reported.

Raising the interest rates twice — in October and November — didn’t help the metical’s plunge, Bernama reports. The depreciation picked up pace in November. By the end of the month the exchange rate was about 55 meticais to the dollars on the inter-bank market.

Credit and debit cards should be used abroad to pay for such things as vacations, health and education expenses, but not to make commercial imports, Cove said, according to Bernama. There are “normal mechanisms controlled by the central bank” in place for commercial imports, he said.

Mozambique exports coal, gas, sugar and cotton. A global drop in commodities prices made its currency fall against the dollar in one of Africa’s second-worst performances this year, Bloomberg reported.

Discoveries of natural gas offshore in the northern Rovuma basin could help make it the world’s top exporter of liquefied natural gas within a decade.