CTA proposes ‘cushion’ for essential commodities

The president of the Confederation of Economic Associations of Mozambique (CTA), Rogério Manuel, is proposing that the government establish "cushions" to ensure that the rise of the US dollar against the metical does not affect the price of basic products to too great an extent.The dollar has appreciated significantly over the past months, ultimately reaching 40 meticais, compared with 33 at the start of the year, and raising concerns that this exchange rate will affect the importation of essential commodities like wheat and rice."We are working with the Central Bank to see what can be done, but at this point I do not see many options. What I can guarantee is that the issue of the national currency is on the table, "said Manuel, speaking to reporters in Maputo last week.Manuel added that the intention of the CTA’s proposal was to minimise the impact of the exchange rate hike, given that Mozambique lives mainly on imports because domestic production cannot meet demand.Manuel says that the Bank of Mozambique and the CTA are watching the situation closely. "I think a cushion from the Government for the import of basic goods would be the best way out. But I do not know how much money the Government might have to support a measure like this."In Manuel’s opinion, we must prioritize basic goods because imports of non-essential goods can be delayed until better times. He also observes that the current exchange rate is bound to affect business negatively and, consequently, the amount of revenue collected by the government also.