Notice No. 003/GGBM/93 Approving the Regulation on the Process for Converting Mozambican External Debt into Financial Investments

BANCO DE MOÇAMBIQUE NOTICE No. 003/GGBM/93

The Governor of the Bank of Mozambique, exercising the competence conferred upon him by Article 16, paragraph 2 of Decree 24/88 of 28 December, approves the Regulation on the Process for Converting Mozambican External Debt into Financial Investments.

Maputo, 13 August 1993

THE GOVERNOR OF THE BANK OF MOÇAMBIQUE Adriano Afonso Maleiane

REGISTRATION OF THE PROCESS FOR CONVERTING MOZAMBIKAN EXTERNAL DEBT INTO FINANCIAL INVESTMENTS

Decree No. 24/88 of 28 December, issued by the Council of Ministers, in Article 16, paragraph 2, confers upon the Bank of Mozambique the competence to regulate the process of converting eligible Mozambican external debt, issuing the complementary norms necessary for the execution of that legal provision.

In these terms, the Bank of Mozambique makes public the present Regulation on the Process for Converting Mozambican External Debt into Financial Investments, the provisions of which follow:

ARTICLE 1 Eligible Debt for Conversion

1. The operations for converting Mozambican external debt cover debt related to loans and financing officially registered, that is, contracted and authorized by the Government of the Republic of Mozambique.

2. The categories of eligible applications are those contained in Article 4 of Decree 24/88 of 28 December, issued by the Council of Ministers, namely: a) Realization of enterprises or capital of new companies, acquisition of shares in already constituted companies, or participation in capital increases; b) Financing of local costs in national currency, related to the study or execution of projects, either directly or through the constitution of a fund in Meticais intended to cover expenses in material means and the provision of services, including technical assistance; c) Investment through Financial Funds constituted for this purpose by management companies.

3. Creditors originating from the eligible external debt or assignees of the credit right, correlated to said debt, are eligible to participate in the debt conversion program, provided they observe the provisions of Decree 24/88 of 28 December, issued by the Council of Ministers, and the provisions of this Regulation, and prove this status through a title passed by the assigning creditor.

ARTICLE 2 Submission of Proposals

1. Proponents must submit their investment project to the Investment Promotion Center for approval, accompanied by the form contained in Annex A, duly filled out, containing all requested data.

2. Likewise, a copy of the form referred to in the previous paragraph must be sent to the Bank of Mozambique, in a sealed envelope, by registered mail with acknowledgment of receipt, addressed to the following address: Bank of Mozambique Foreign Exchange and External Debt Control Department Avenida 25 de Setembro No. 1695 P.O. Box No. 423 MAPUTO

3. Proposals that do not contain all the requested informational elements will be rejected.

ARTICLE 3 Evaluation of Proposals

1. The evaluation and selection of proposals by the Bank of Mozambique will take into consideration the following parameters: a) Type of project; b) Location of the project; c) Additional resources.

2. The Bank of Mozambique will periodically publish a table of quotations for the repurchase price by the Bank, based on the parameters referred to in the previous paragraph.

3. Any changes resulting from the preceding paragraph will apply to proposals submitted to the Bank of Mozambique on a date subsequent to the publication of the quotation table.

ARTICLE 4 Notification of Proponents

1. The Bank of Mozambique will notify proponents, within a period of 45 (forty-five) days, counted from the date of submission of the proposals, of the decision taken, which may be one of the following: a) Approval of the proposal for immediate execution; b) Approval of the proposal for deferred execution; c) Rejection of the proposal.

2. The start of execution must occur, in the case referred to in item a) of the previous paragraph, within a period of 120 calendar days, counted from the date of notification.

3. The start of execution is considered to be the delivery to the Bank of Mozambique of the title representing the credit right.

ARTICLE 5 Start of the Debt Conversion Process

1. The external debt conversion process begins with the notification referred to in paragraph 1 of the previous Article.

2. In the case where the proponent is not the original creditor, the Bank of Mozambique will inform the original creditor of its intention to cancel the obligations arising from the service of the debt related to the negotiation.

ARTICLE 6 Disbursements Related to External Debt Conversion

1. Disbursements will be made to a non-interest-bearing account, opened at the Bank of Mozambique, in the name of the proponent, for this purpose, or through another modality that this party may define.

2. The account referred to in the previous paragraph will be credited with successive disbursements made by the Bank of Mozambique, and debited with duly authorized applications.

3. Once the last disbursement due for the debt conversion has been made, a title of extinction of the external debt will be drawn up, which will be signed by the investor assignee and registered by the Bank of Mozambique.

ARTICLE 7 Commissions

At the time of submission of proposals, the proponent will pay the Bank of Mozambique the non-refundable amount of USD 1,000, or equivalent, in other freely convertible currencies, in the form of a telegraphic bank transfer, or other methods permitted by the Bank of Mozambique.

ARTICLE 8 Control and Execution of the Debt Conversion Program

During the implementation of the external debt conversion program, the investor will submit annually to the Bank of Mozambique a detailed report regarding that year, for the purpose of controlling the applications of the disbursements made within the scope of the external debt conversion.

ARTICLE 9 Re-exportation of Capital and Transfer of Profits and Dividends Abroad

The re-exportation of financial resources resulting from the conversion of external debt, as well as the transfer of profits and dividends abroad, resulting from investments made within the scope of said conversion, will be carried out under the terms established in Decree No. 24/88 of 28 December.

ARTICLE 10 Clarification of Doubts

Doubts resulting from the interpretation and application of this Regulation will be clarified by the Foreign Exchange and External Debt Control Department of the Bank of Mozambique.

Maputo, 13 August 1993