Mozambique is happy!

 Reuters (2011-11-23) Mozambique is "happy" with the strength of the metical, the world's best-performing currency this year against the dollar, and has no plans at the moment to weaken it, Finance Minister Manuel Chang said on Tuesday.

Chang also told Reuters the war-scarred southern African nation was considering launching a debut international bond to fund an ambitious infrastructure programme, although external conditions were not favourable at the moment.

Priority would be given to raising domestic finance, 

he said, and there were no plans to open up its nascent treasury bill and bond market to foreigners. "There is a lot of appetite among Mozambicans to invest in domestic bonds," he said. Mozambique has a domestic bond market with maturities up to five years. It is rated B+ by Standard & Poor's and B by Fitch.

The metical is up 21 percent against the dollar this year, far outstripping rival strong performers such as Japan's yen, which is up 6 percent year-to-date, but Chang dismissed concerns its level is hurting exporters, whose revenues are in dollars but costs in meticais.

"We are monitoring the metical, but for now the currency is under control and at a level that we need. We are happy with where it is and would like to keep it that way," he said. The government would only act if the currency proved to have a major impact on exporters, which for now was not the case, he said.

The start this year of coal exports by Brazilian mining giant Vale and major planned investments in infrastructure and farming meant the economy might also exceed its already pacy growth forecasts for 2011 and 2012, he added.

"We are still expecting 7.2 percent for this year and 7.5 for next year, but we think that both forecasts can be upgraded a bit because of export of coal and some infrastructure projects such as railways," he said. "The 7.5 percent for next year is the minimum we expect."

Speaking at the start of a major coal conference in the capital, Maputo, Chang also underscored the government's commitment to keeping its minerals tax and royalties regime as it is. "There are no plans to change or raise taxes and we are not thinking about that," he said.

Home to some of the world's largest untapped coal reserves and vast offshore natural gas fields, Mozambique currently levies a 35 percent corporate tax on miners and its mineral royalties are relatively low. "We've changed the legislation two years ago and that is the legislation that we are using now," Chang said.

Besides Vale, other miners active in the former Portuguese colony include Rio Tinto , Ncondezi Coal , Beacon Hill Resources, ENRC, Nippon Steel, Posco, Coal India, Mozambi Coal and Jindal Steel & Power.

(Source: Reuters)