Radio New Zealand - Te Reo Irirangi o Aotearoa

IMF says Samoan tala is overvalued

Posted at 23:00 on 13 August, 2012 UTC

The International Monetary Fund says the Samoan tala is overvalued.

IMF directors held consultations with the Samoa government in June, concluding the tala has appreciated substantially in real effective terms over the past decade and is assessed to be overvalued.

An IMF report on the meeting said most IMF directors considered a gradual realignment of the exchange rate could help prevent further reserve losses and also strengthen export competitiveness.

But the directors cautioned the pace and timing of a realignment would need to be carefully managed, with due consideration to the potential impact on external debt and inflation.

In its assessment, the IMF has called on the Samoa government to strengthen the supervision of the financial sector, by bringing the Unit Trust of Samoa under the oversight of the Central Bank.

The IMF directors also encouraged authorities to undertake bold reforms, focusing on increasing the efficiency of public enterprises, further improving public financial management, making customary land more accessible for productive use, and deepening financial intermediation.