By OT
Strengthening the tala is a decision for the Central Bank for good reason – ie to keep exchange rates out of the hands of Politicians and importers.
Samoa will be financially bankrupt without foreign reserves to back up the Tala and the easiest way to drain the foreign reserves ( current value only about 7 months import value) is to make imports cheaper by strengthening the tala value.
Samoan tala is worth nothing if there are no foreign currency in the hands of Government to support it.
Strengthening the tala is an old disingenuous albeit attractive argument- strengthen the tala and make imports cheaper for the poor consumers is a very persuasive argument but we need to be aware that our imports far exceed our exports and we have a huge foreign debt to pay all of which require foreign currency reserves not Samoan tala.
Because of our much larger import to export ratio making our tala fragile in its international value sooner or later consumers may actually suffer if we run out of foreign dollars to back up the tala and we could go back to the 1998 era where Government had to ration out foreign reserves and oil vessels refused to offload fuel until prepaid- Remember those days???
It does not matter how much Samoan tala you have and easy for Government to print out tala but they are all worthless if you dont have foreign dollars to support it. Strengthen the Samoan tala and you make it much cheaper to buy foreign dollars and much easier to drain those precious foreign dollar reserves.
Remember if our foreign exchange rates are not properly handled immediate benefits of cheaper imports from a strong tala will soon translate into a nightmare of very expensive imports due to foreign exchange shortages and the whole exercise backfires .
A strong Samoan tala could easily use up our very limited foreign reserves and Corruption in giving out foreign exchange favours; import restrictions and then ofcourse import duty and tax increases etc could come back again and consumers and the country will regret it as it did in the 1980s. Remember those times? -even the oil suppliers refused to give us oil until they were prepaid.
I imagine that the Central Bank and Ministry of Finance officials will advise great caution to the politicians some of whom would do well to first understand the economic relationship of the Samoan tala to foreign currency reserves and to our urgent need to maintain those reserves to pay for imports and our loans.
Countries have gone bankrupt (eg Greece) because their foreign reserves could not back up the value of their internal currency reserves.