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Mozambique Update for September 2007 Financial Reporting Framework in Republic of Mozambique (September 2009 Update) IFRSs required for banks in Mozambique in 2007 and for Others in Future Years The Government of the Republic of Mozambique and the Bank of Mozambique (BM, the central bank) are requiring all Mozambique banks to start publishing IFRS financial statements in 2007. The IFRS requirement will be extended to large non-banking corporations starting in 2009. The BM itself began reporting under IFRSs in 2006. The requirements were set out in: A joint letter of intent from the Government of Mozambique and the BM to the International Monetary Fund (IMF) dated 28 March 2007 (available on the IMF's Website Mozambique Page; and also in A public notice (Aviso No. 4/GBM/2007) issued by the Bank of Mozambique on 25 March 2007 (available in Portuguese on Bank of Mozambique's Website). Although not expressly addressed in the letter of intent and notice, the Government has informally indicated that it expects to extend the IFRS requirement to insurance companies in 2008 and to medium-sized companies in 2010. Excerpt from Letter of Intent from Government of Mozambique and Bank of Mozambique to the IMF Dated 28 March 2007 27. The BM will also continue to strengthen and modernize its supervisory functions and implement the recently approved organizational changes in view of strengthening onsite and off-site monitoring. In this regard, training to adopt a risk-based supervision approach will start in 2007, at which time the new inspection manuals will also be used. The BM is implementing a timetable to adopt IFRS in the banking system in 2007. Based on the results of the FSTAP study, to be completed by mid-2008, the application of IFRS will also be extended to the corporate sector in January 2009 for large companies. This will improve the ability of the financial system to evaluate the quality of their loan portfolios. Further, new regulation on the assessment, classification and provisioning of credits as well as a regulation on integral risk management for credit institutions and finance companies have been approved and will become effective during the first semester of 2007. The BM will issue its own 2006 financial statements in line with IFRS in 2007.