– The management of monetary policy must be complemented by actions in the real sector of the economy to better control inflation, argues Tomás Matola, President of the Executive Committee of BNI, at Semanário Económico.

 

Price stability is a sine qua non for the development of any economy. Low rate inflation allows low interest rates, which encourages investment, due to the low cost of financing, boosting growth and employment, in addition to positive effects on other variables that represent macroeconomic stability as an important element for investor confidence.

In the case of Mozambique, despite the trend of stabilization in recent years, inflation, like most of the other indicators, is considerably volatile, with wide variations in short periods of time.

 

Due to the high level of external dependence, the main source of the composition of inflation in the country is imported inflation, “because of the characteristic of our economy that is fundamentally importing”. Tomás Matola, sees the country’s vulnerability to external shocks as limiting the effectiveness of monetary policy in stabilizing prices, insofar as the economic agents that influence inflation are beyond the reach of economic policy measures. “Economic policies must reach their target groups”, emphasizes Tomás Matola.

 

It is under this spectrum that the BNI CEO understands and defends that actions in the real sector of the economy, namely the diversification of the economy and the substitution of imports, play a fundamental role in stabilizing prices in the economy. “Even though the Central Bank makes interventions to control inflation in the short term and prevent it from fluctuating a lot, at the same time, on the side of the real sector, there must be actions that guarantee that in the medium and long term we have controlled and low inflation” , he said.

 

Tomás Matola explains that, with the diversification of the economy and the substitution of imports, the country will be in a position to control inflation without necessarily always using monetary policy. “In a context where we are able to establish a supply of local products to meet local demand, then we will be in a position for our economic policies to affect all economic agents that intervene in the production processes that affect inflation”, he adjusted.

 

Source: Semanário Económico