Circular No. 03/EES/2011: Conversion and Transfer of Non-Resident National Currency Account Balances and Amortization of External Loans

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--- Bank of Mozambique --- Administration

ECONOMIC STUDIES AND FOREIGN

CIRCULAR NO. 03/EES/2011

Maputo, June 8, 2011

SUBJECT: Conversion and Transfer of Non-Resident National Currency Account Balances and Amortization of External Loans

Law No. 11/2009, of March 11, the Exchange Law, established a new exchange regime where the principle of freedom of current transactions prevails, defined – by exclusion – as those not classified as capital operations.

Operations for the transfer of profits, dividends, and interest are classified as current transactions by the Classification Table of Exchange Operations established by the Bank of Mozambique under paragraph 2 of Article 4 of the Regulation of the Exchange Law.

However, Article 101 of this regulation, in observance of the provisions of paragraph 3, letter c) of Article 6 of the Exchange Law, considers the opening and movement of non-resident accounts in national currency related to capital operations as capital operations subject to the authorization of the Bank of Mozambique.

Thus, the aforementioned earnings, although current transactions, are normally related to capital operations, which are subject to the authorization of the Bank of Mozambique, as well as the opening and movement of accounts related thereto; it is therefore pertinent to establish guidelines that ensure full respect for the principle of freedom of current transactions.

On the other hand, it is equally pertinent to clarify that the amortization of external loans previously authorized by the Bank of Mozambique, although capital operations, do not require new authorization and, regardless of the account denomination or the circumstance of being held by a resident or non-resident entity, are processed through mere foreign exchange registration with the banks intermediating the operation, observing the terms defined in the external loan authorization document.

In these terms, the Bank of Mozambique, under paragraph 2 of Article 130 of the Regulation of the Exchange Law, approved by Decree No. 83/2010, of December 31,

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--- Bank of Mozambique --- Administration

as well as under paragraph 2, letter d) of Article 37 of Law No. 1/92, the Organic Law of the Bank of Mozambique, clarifies:

1. The earnings of non-residents, including profits, dividends, and interest, resulting from investments with resident entities, may be deposited in non-resident accounts denominated in national currency at local banks and are freely convertible into foreign currency and transferable abroad, subject only to foreign exchange registration with the banks carrying out the operation.

2. The provisions of paragraph 1 do not dispense with the need for prior authorization from the Bank of Mozambique for the opening of a non-resident account in national currency when such an account is related to capital operations, as defined in paragraph 3, letter c) of the Exchange Law and regulated by Article 101 of its Regulation.

3. The discipline of this circular extends to external loans previously authorized by the Bank of Mozambique, the transfers of amounts regarding amortizations of which do not require new authorization, subject only to foreign exchange registration carried out by intermediary banks, regardless of the account denomination or the circumstance of being held by a resident or non-resident entity, observing the terms defined in the external loan authorization document.

4. The foreign exchange registration related to the amortization of external loans is carried out by completing the Private Capital Export Form, the form of which is annexed to this Circular and forms an integral part thereof.

5. This Circular enters into force on July 11, 2011, revoking all provisions to the contrary.

6. Doubts arising from the interpretation and application of this circular must be submitted to the Foreign Department of the Bank of Mozambique.

Waldemar Fernando de Sousa ADMINISTRATOR

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Annex to Circular No. 3

FORM FOR ISSUANCE OF PRIVATE CAPITAL EXPORT FORM (BECP) NO. ________

APPLICANT DATA NUIT __________________________________________________________________ Ref. No. at BM ______________ Name ____________________________________ Locality __________________________ Telephone ___________________________ Fax __________________________ Electronic Mail ________________________ Activity Branch_______________________________________________________ Name of Applicant's Representative________________________________________ Address of Applicant's Representative ____________________________________ Applicant's Country ____________________________________________________

BENEFICIARY DATA Ref. No. at BM ______________ ID Doc. No. ________________________________ Doc. Type (Passport, ID, Deed, etc.) _______________________________________ Name __________________________________________________________________ Beneficiary Type (Individual or Collective) _________________________________ Country __________________________ Telephone _________________________________

TYPE OF OPERATION:

1. EXTERNAL LOAN Ref. No. at BM ______________ Start Date //____ End Date //____ Balance to Pay____________________________________________________________ Operation Justification Doc.______________________________________________

2. FOREIGN DIRECT INVESTMENT Ref. No. at BM ______________ Authorization Date //____ Project Name___________________________________________________________ Operation Justification Doc.______________________________________________

3. OTHER OPERATIONS Operation Description_____________________________________________________ Operation Justification Doc._______________________________________________

PAYMENT CONDITIONS ABROAD Currency __________ Amount __________________________ Amount in words________________ Receiving Bank of Funds ________________________________________________ Sending Bank____________________________________________________________ Source of Financing: Own Funds [ ] Exchange Fund* [ ] Credit [ ] Donation [ ] Reason for Request_______________________________________________________ Signature and Stamp of Applicant__________________________________________ Place and Date ____________________________________ //____