Maputo, 27 May (AIM) – The prominent Mozambican anti-corruption NGO, the Centre for Public Integrity (CIP), calls for implementation of structural measures to reduce the economy’s vulnerability to foreign currency shortages and exchange rate fluctuations.
The country’s Confederation of Business Associations (CTA) has been warning that the shortage of foreign currency (particularly of US dollars) is one of the main constraints on the efficient operation of productive sectors, particularly manufacturing, commercial agriculture, tourism, mining, and logistics.
The shortage has been leading to partial or total shutdowns of operations, job losses, and reduced tax revenues.
According to CIP economist and researcher, Teresa Bueno, speaking, in Maputo, at the launch of a research on “Foreign Currency Shortages and Exchange Rate in Mozambique”, measures aimed at reducing the economy’s vulnerability to foreign currency require reduction on import dependence and strengthening domestic foreign exchange generation capacity.
“We recommend strengthening domestic production as an attempt to reduce import dependence. We also recommend the promotion of economic diversification, industrialization, and increased export capacity,” she declared.
According to the researcher, the Mozambican economy remains structurally vulnerable to exchange rate pressure, a situation that affects economic growth, private sector performance, inflation, and public debt.
Therefore, she said, the country needs to invest in productive infrastructures, particularly in the energy and transport sectors, considered essential to increase the economy’s competitiveness.
“It includes investment in human capital and agricultural modernization, with a view to increasing productivity and strengthening the national productive base”, she said.
The researcher also highlighted the need to improve the management of external debt and strengthen fiscal sustainability, especially at a moment when “currency depreciation tends to worsen the burden of public debt, especially due to the country’s high exposure to external debt.”
Improvements in the business environment is also recommended, “considering that the persistent shortage of foreign currency has hampered business activities and reduced the capacity to import raw materials and equipment.”
“Improving the business environment also involves resolving the persistent shortage of foreign currency that we have been witnessing. Companies interviewed in the study reported a reduction of approximately 40 percent in their import capacity and operational activities due to the difficulty of accessing foreign currency”, the researcher said.
According to the study, over 500 companies have closed down, a situation that has resulted in the loss of more than 15,000 jobs. “The persistent shortage of foreign currency and the alleged stability of the official exchange rate remain misaligned with real market conditions, exacerbating the country’s macroeconomic vulnerability”, she said.
(AIM)
SNN/Am/
