10000 Meticais – Mozambique

In 2003, Mozambique's currency, the metical (MZM), was in a period of relative stability and cautious optimism, a significant achievement following a history of severe inflation and devaluation. This stability was largely underpinned by a successful structural adjustment program and continued support from the International Monetary Fund (IMF) under the Poverty Reduction and Growth Facility (PRGF). The government maintained a tight fiscal and monetary policy, which helped control inflation to single digits—a dramatic improvement from the hyperinflation of the late 1980s and early 1990s—and built international reserves. This macroeconomic discipline provided a foundation for economic growth, which was among the highest in Africa at the time.

However, the currency situation was not without underlying vulnerabilities. The economy remained heavily dependent on foreign aid and a narrow base of mega-projects in sectors like aluminum (MOZAL) and natural gas, which generated export revenues but limited broad-based employment and domestic production. Furthermore, the metical was not fully convertible, and the financial system was shallow, with limited access to credit for most businesses and households. The stability was therefore somewhat fragile, contingent on continued donor support and prudent policy management.

Looking forward, a major monetary reform was already on the horizon in 2003. The government and the Bank of Mozambique were preparing to redenominate the currency, a process that would eventually occur in July 2006. This plan involved removing three zeros from the existing metical (MZM) to create a new metical (MZN), simplifying transactions and restoring public confidence in the national currency after its long history of high denominations. Thus, 2003 represented a year of consolidation, where the hard-won stability set the stage for a significant modernizing reform of the monetary system.