Notice No. 02/GBM/2000 of 23 February - Mandatory Reserves

BANCO DE MOÇAMBIQUE NOTICE No. 02/GBM/2000 SUBJECT: Mandatory Reserves

Under the provisions of paragraphs 1 and 2 of Article 27 of Law 1/92 – Organic Law of the Bank of Mozambique.

Article 1 Scope of Application The provisions of this notice apply to all credit institutions covered by Law 15/99, of November 1, which regulates the establishment and exercise of the activity of credit institutions and financial societies, holding liabilities referred to in Article 2 and monetary assets, with the Bank of Mozambique.

Article 2 Liabilities Subject to Levy The liabilities subject to the constitution of the mandatory reserve, and which constitute the Tax Base (TB) of the mandatory reserve, are the following: a) Demand deposits, in National Currency b) Notice deposits, in National Currency c) Time deposits, in National Currency d) Demand deposits, in Foreign Currency, of Residents; e) Notice deposits, in Foreign Currency, of Residents;

f) Time deposits, in Foreign Currency, of Residents; g) State deposits in Commercial Banks; h) Deposits from other credit institutions that do not result from the application of the interbank money market.

Article 3 Calculation of the Tax Base The tax base will be calculated from the average balance of the last three months, of the liabilities referred to in Article 2.

Article 4 Levy Rate The mandatory reserve rate is fixed at 7.95%, applied to the tax base referred to in Article 3.

Article 5 Forms of Constitution The mandatory reserve may be constituted in the following forms: a) Cash b) Checks of the institutions themselves drawn on other national credit institutions; c) Account-to-account transfer; d) Other financial assets capable of integrating the clearing system, excluding demand deposits in foreign currency of credit institutions, with the Bank of Mozambique.

Article 6 Methodology of Constitution

1. The mandatory reserve is constituted on a daily average basis.

2. For the purposes of complying with mandatory reserves on a daily average basis, the following formula will be applied:

   DOs Average Balance = --------- N

Where: DOs – is the sum of the daily accounting balances of demand deposits in national currency, of credit institutions with the Bank of Mozambique, calculated for the period of constitution of the mandatory reserve, based on statements issued by the Issuance and Treasury Department of the Bank of Mozambique. N – is the number of days that make up the period of constitution of the mandatory reserve. 3. The period of constitution of the mandatory reserve under this regime will start on the 16th of each month and end on the 15th of the following month. 4. The average of the daily values obtained in accordance with the provisions of the preceding paragraphs of this Article, should not be less than the amount of the mandatory reserve calculated based on the balance of the last three months, of the aggregates referred to in Article 2 of this Notice. 5. The mandatory reserve will be constituted in national currency.

Article 7 Exemption Period

1. All credit institutions are exempt from the constitution of mandatory reserves, for a maximum period of six months, counted from the date of commencement of their activity.

2. The exemption referred to in the preceding paragraph of this Article is automatic and its terms will be formally communicated by the Banking Supervision Department of the Bank of Mozambique.

Article 8 Submission of Information

1. The credit institutions covered by this Notice shall submit to the Bank of Mozambique, monthly balance sheets accompanied by the mandatory reserve calculation sheet, attached, by the 15th of each month, reported to the previous month.

Article 9 Penalties

1. The penalty under this Notice applies to the mandatory reserve deficit ascertained at the end of the constitution period, and will take the form of a monetary penalty translated in the following formula:

   Penalty = ( SM – r x BI) x T x N ------------------------- 36500

Where: SM – is the average of the accounting balances of demand deposits in national currency of credit institutions with the Bank of Mozambique, calculated for the period between the 16th of each month and the 15th of the following month, based on statements issued by the Issuance and Treasury Department of the Bank of Mozambique. r` - is the mandatory reserve rate. BI - is the tax base of the mandatory reserve. T - is the penalty rate for the mandatory reserve deficit, expressed in percentage points, corresponding to the highest interest rate on active operations of the infringing institution plus two percentage points.

N - is the number of days of the month to which the mandatory reserves relate. 2. The Bank of Mozambique will debit the demand deposit account of the infringing credit institutions by the value of the penalty.

Article 10 Clarification of Doubts Doubts that arise in the interpretation of this Notice should be submitted to the Credit Operations Department of the Bank of Mozambique.

Article 11 Entry into Force and Repeal This Notice takes effect from the period of constitution of the mandatory reserve of the month of March (from 16/03/2000 to 15/04/2000), repealing Notice No. 07/GBM/99, of May 17.

Maputo, on February 23, 2000 The Governor (Adriano Afonso Maleiane)