Inflation

The government’s tight control of spending and the money supply, combined with financial sector reform, successfully reduced inflation from 70% in 1994 to less than 5% in 1998–99. Economic disruptions stemming from the devastating floods of 2000 caused inflation to jump to 12.7% that year, and it was 13% in 2003. Mozambique’s currency, the Metical (MZM), devaluated by 50% to the dollar in 2001, although in late 2001 it began to stabilize. Since then, it has held steady at about 24,000 MZM to 1 U.S. dollar. New Metical replaced old Meticals at a rate of a thousand to one on January 1, 2007, bringing the exchange rate to 25 (new) MZN to 1 USD.