MOZAMBIQUE plans to limit the use by its citizens of credit and debit cards abroad to help stem foreign exchange outflows and protect the southern African nation’s economy, which has been ravaged by a slump in commodity prices.
“The fall in prices of these exported goods results in an aggravation of the deficit” in the balance of payments, Bank of Mozambique Governor Ernesto Gove told reporters in the capital city of Maputo. “This is why it’s an exceptional moment, in that we need to take certain measures.”
Credit and debit card transactions by Mozambicans abroad jumped to $800 million last year from $300 million in 2012, and equivalent to more than half of the country’s 2014 exports of about $1.5 billion, Gove said. Authorities are still working on what the limits on the cards will be, he said. The central bank also wants to ensure that exporters comply with a law requiring them to convert at least 50% of their export receipts into local currency.
A global decline in commodity prices has reduced Mozambique’s revenue from exports of coal, gas, sugar and cotton and its currency’s 40% plunge against the dollar makes the ‘metical’ the world’s third-worst performer this year. The International Monetary Fund (IMF) agreed in principle last month to give Mozambique an emergency borrowing facility of $286 million, and the country is trying to restructure an $850 million bond borrowed at commercial terms in 2013.
“These measures will come into force immediately, as soon as we decide what the limits should be,” Gove said.