In his maiden address to Parliament, President Bio promised that his objective was to maintain a stable and competitive exchange rate through increasing exports and reducing imports of consumer goods.
One year down the line and in a similar fashion, President Bio gave excuses for the current inflation and exchange rate in the country in his address to Parliament.
“ Mr. Speaker, Honourable Members, despite our gains in fiscal reform, we have experienced a depreciation of the Leones over the past 12 months. The lull in iron-ore mining and possible off-shore foreign exchange transactions are among factors that limit our foreign exchange inflows into the official banking sector,” Bio confessed.
That on the demand side, the continued dollarization of the economy remains the single most factor affecting the exchange rate.
That they will continue to enforce existing regulations including a ban on carrying out domestic transactions in foreign currency such as payments for rent and hotel accommodation and institute policies to dampen demand for non-productive imported goods.
That they are finalising regulations on currency swapping with key trading partners, hoarding of foreign currency in homes, and paying Daily Subsistence Allowance (DSA) in currencies of the host countries. All these measures will curtail demand for foreign currencies.
That the cumulative effect of the increased in supply of foreign exchange and cutbacks in demand will arrest the depreciation of
“This has kept inflation in two digits although projected to progressively declined to single digit in 2021. In the coming year, Government will consolidate ongoing reforms and adopt new measures to expand production which will help to stabilise the exchange rate and retail prices of commodities,” Bio lamented.