ANB-BIA SUPPLEMENT - ISSUE/EDITION Nr 331 - 01/10/1997

ANB-BIA SUPPLEMENT

ISSUE/EDITION Nr 331 - 01/10/1997

CONTENTS | ANB-BIA HOMEPAGE


Mozambique

One year's viewpoint

by Joao de Brito Filipe Langa, Mozambique, July 1997

THEME = ECONOMY

INTRODUCTION

Mozambique seeks to strengthen its economy

Inflation is edging towards single figures, and the exchange rate, which normally measures the stability of the currency, has been stable since 1996. "The Metical (Mozambican currency) is, therefore, becoming stable", stated Adriano Maleiane, Governor of the Bank of Mozambique, speaking in Beira, capital of Sofala Province. This was at a press conference held on the 17th anniversary of the creation of the Metical, which replaced the Portuguese Escudo, used in colonial times as the official legal tender.

In general, all targets have been achieved, particularly those concerning price stability. In 1996, inflation up to March stood at 6.5%; in April - 5.7%; by May it had decreased to 3.9%.

Adriano Maleiane emphasised that the downward trend in inflation, is a consequence of growing confidence in Mozambique's economy, reflected in a higher level of new investments, and higher agricultural production, together with fiscal and monetary policies which target the strengthening of financial discipline.

When asked what the positive consequences of such measures are for the life of the average citizen, Mr Maleiane said that Mr/Mrs Average Citizen cannot ignore matters relating to inflation, because people have to take into account, not the amount of money they have, but what they can buy with their money. "If inflation is low, we can buy a little more with the same money - and this is now taking place".

The Governor was asked to comment on the recent wave of protest demonstrations against the high cost of living, sponsored by RENAMO. He said: "People are perfectly free to demonstrate. Obviously they want their purchasing power to go even further, but we still have a long way to go. There must be increased investment and production, but investment will only come about when inflation and interest rates are low, and that is what we are trying to achieve".

Illegal currency dealing


The proliferation of shops throughout the country, illegally dealing in currency, was one of the topics focused on during the press conference. Mr Maleiane emphasised that only authorised dealers, bureaux de change and the Commercial Bank can sell foreign currency. Therefore, if a bar or a corner shop offers dollars for sale and prospers with this "business side-line", it's only because society is collaborating in this misdemeanour.

Credit concession


As Mozambique's central bank, the Bank of Mozambique has a priority in extending credit to agricultural commercial companies, as well as to small and medium size enterprises. Mr Maleiana said that "great care should be taken in granting credit, and it should only be granted with the knowledge that the money advanced, will eventually be paid back. We should also be aware that a country cannot make ends meet by granting credit all the time".

Counterfeiting


Asked to comment on problems connected with counterfeiting, the governor of the Bank of Mozambique said that this is not a purely Mozambican phenomenon. "It's not something exclusive to Mozambique because everywhere in the world there are attempts made to counterfeit bank notes. It should be noted that our bank notes have a security device which makes them difficult to forge. But people do try! We know some who produce "bank notes" which have been photocopied! Here at the central bank, we publicize the characteristics of the security devices, so that any citizen can check bank notes when they receive them. We also print information posters for distribution, showing how forgeries can be detected.

In conclusion, the governor of the Bank of Mozambique said that it was not possible to issue bank notes of greater value. "The most important thing is to bring down inflation so that the smaller notes can begin to function".


END

CONTENTS | ANB-BIA HOMEPAGE


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