Central bank’s deputy governor says new government will have to deal with several monetary policy challenges

The observance of the independence of the decisions made by the National Bank of Moldova is one of the most difficult monetary policy challenges that the new government will have to face, the central bank’s deputy governor Victor Cibotaru said. He specified that the central bank is a public, autonomous legal entity, Info-Prim Neo reports. The vice governor gave a speech at the conference “Economic Crisis in Moldova. Defining a new Model of Government”organized Thursday by the Independent Analytical Center “Expert- Grup” and IDIS “Viitorul” as part of a project financed by the Black Sea Trust and Friedrich Ebert Foundation. Another challenge, according to Cibotaru, is the confirmation of the fact that the central bank’s currency and monetary policy is aimed at maintaining the stability of prices and that the National Bank cannot set to achieve two or more objectives simultaneously. The bank pledges to continue implementing the inflation targeting regime that aims to set the short- and long-term rate of inflation and the currency and monetary policy measures, Cibotaru said. He also said that the central bank will make public its decisions and forecasts by publishing reports on the inflation and other subjects. “The National Bank does not aim to appreciate or depreciate the national currency, favoring certain economic entities. It intervenes only in cases of speculations on the currency market and other excesses,” he said. Accordion to Cibotaru, there is no directly proportional relationship between the appreciation of the national currency and the fall in exports. Other causes should be analyzed in this context. For instance, the leu appreciated powerfully in 2004 (by 11.4%), 2007 (by 7.6%) and 2008 (by 14.4%). Exports during these years rose by 25.7%, 39.4% and 23.4% respectively. “The National Farmers Federation would want to sell the products at a higher nominal exchange rate of the leu against the dollar and would prefer a lower exchange rate when purchasing seeds, diesel oil and chemicals. We cannot fix an exchange rate for March and another exchange rate for September,” the deputy governor said. As to the foreign exchange reserves of the central bank, Cibotaru said that there are no reasons for concern. They now total US$1.3 billion and cover three months and a half of import.