Moza embraces currency reform
In the currency reform, three digits have been dropped on the metical ‘ the local currency.
The new notes and coins began circulating in the country last Saturday, with the business sector and public welcoming the move.
The currency reform is no more complex than dividing by 1 000.
Thus the old 1 000 metical coin becomes worth one metical “of the new family”, as the government and the central bank refer to the new notes and coins.
The largest old note, for 500 000 meticais, is now worth 500 meticais. There is a larger note, for 1 000 new meticais, which is worth a million old meticais.
There were about 25 000 old meticais to the US dollar: now there are 25 new meticais to the dollar.
The most striking aspect of the new notes is that they all bear the portrait of the man who led Mozambique to independence, and was the country’s first president – Samora Machel.
This recognition of the founder of the republic is all the more appropriate this year, which marks the 20th anniversary of Machel’s death in a plane crash just inside South Africa, widely believed to have been caused by the apartheid military.
There are six new banknotes, with the face value of 1 000, 500, 200, 100, 50 and 20 “new family” meticais.
In addition to Machel’s portrait, they also bear images of the country’s wildlife ‘ elephants, rhinoceros, giraffe, lion, buffalo and antelope.
No living person is shown on any of the notes, which might calm the fears of opposition politicians who believed that the government was plotting to put President Armando Guebuza’s face on the notes.
The new coins have the face value of 10, five, two and one metical. There are also smaller coins for 50, 20, 10, five and one centavos (the metical has always been divided into 100 centavos, but with calculations in recent years done in the millions and billions of meticais, nobody has bothered much about centavos).
The old banknotes and coins are not being withdrawn immediately from circulation.
Between July 1 and December 31 this year both the old and the new notes and coins will be legal tender, and all shops and services must display their prices in both old and new meticais. In notation, the old meticais are referred to as “MT”, and the new ones as “MTn”.
As from January 1 next year, the old notes and coins can no longer be used in transactions – but during the ensuing year they can be changed for new meticais at any bank.
As from 2008, however, anyone who still has the old notes can only change them for new ones at the Bank of Mozambique itself.
It was the huge devaluations of the currency in the late 1980s and early 1990s that forced Mozambicans to deal in millions and billions of meticals. Even the statutory minimum wage is over a million old meticais.
But now that inflation is more or less under control, the government believed the time had come to make the currency more manageable by removing the last three zeros.
The Finance Ministry and the central bank argued for the reform on grounds of efficiency and convenience ‘ book-keeping is more difficult, and more prone to error, when sums have to be written in billions.
With the old metical, companies found that the columns in their books were not wide enough to accommodate all the zeros.
Certain computer programmes could no longer be used for Mozambican accounts, because they could not handle all the digits.
Clearly there are some fears among the public about the new notes and coins.
Last week long queues built up at banks and cash machines, as people withdrew old notes, just in case something went wrong with the transition.
The major banks worked over last Friday night to change their systems from old to new meticais. This meant that no Internet banking was available on the night, and most of the cash machines were out of service, as the computer programmes were altered.
Meanwhile, the governments of Mozambique and Germany have signed an agreement in Maputo under which Berlin will grant Maputo 47 million euros (about US$59 million) in direct budget support and for five cooperation projects.
Mozambique’s deputy Foreign Minister Henrique Banze, and the German ambassador in Maputo, Klaus-Christian Kraemer signed the accord last week.
A statement from the German embassy said 20 million euros is in the form of budget support, while the Education Sector Support Fund (FASE) will receive 8,5 million euros and the school-building programme will have five million.
Two million euros goes towards support for rural development and decentralisation, while the road building and maintenance programme in the southern province of Inhambane takes five million euros.
The balance 6,5 million euros is earmarked for the “sustainable economic development programme, the release explained.