by Joao de Brito Filipe Langa, Mozambique, July 1997
THEME = 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".
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.
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".
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