Fallout from non-passage of Anti-money Laundering Bill…Banks, Cambios reporting shortage of foreign currency

May 11, 2014 News

– predicts inflation if situation continues

Members of the local cambios, banks and even the private sector have said that Guyana’s current regional blacklisting status due to the non passage of the anti money laundering Bill is leading to a shortage of foreign currency.

Dr. Gobind Ganga, Deputy Governor of the Bank of Guyana

They predict that if this continues, Guyana could see an increase in its inflation rate.
Former President of the Georgetown Chamber of Commerce (GCCI), Clinton Urling, explained that the consequences of Guyana’s current blacklisting status continue to take its toll on its members who are now finding it extremely difficult to source foreign currency.
Urling said, “The business community, especially the private sector, is feeling the effects of this blacklisting. I do hope that this situation is not brushed aside and given the immediate attention it needs by our policy makers.”
“If it is one thing businesses know to do is to adapt, and that adaptation comes at a price. As businesses feel the squeeze, so will its customers. And if our policy makers don’t try to set things right then we could definitely see inflation rate rising in the near future.”
The former GCCI President said that one worrying effect of the current blacklisting status is that foreign currency has become “extremely difficult” to obtain.
“The Guyana dollar has been weakening and importing purchases have also increased. Remittances will also be affected; it will be harder to get forex because the cost to send money will also increase. If we continue to not be reactive then for sure we will see inflation rate increasing.
“We are being begged by our members to do something to combat the effects of this situation but ultimately the way forward lies in the hands of our leaders.”
Also commenting on the situation was Ramesh Persaud, newly appointed Chairman of the Private Sector Commission.
Persaud said, “Everyone is concerned about the consequences if the Anti Money Laundering and Countering the Financing of Terrorism Bill is not passed by its May 29 deadline. International payments have become more burdensome due to the amount of paper work needed to be done.

Ramesh Persaud, Chairman of the Private Sector Commission

“There is a difficulty in acquiring foreign currency and we are concerned about the current high exchange rate. It is having an impact on businesses. It is an issue of much concern for us but we are unable at this time to link the shortage of foreign currency to Guyana’s current blacklisting status. We are still in the process of doing some more research.”
Local cambios contacted yesterday said that there was a shortage of foreign currency in the system but at this point the situation seems stable.
A representative of L. Mohabeer and Sons Cambio said, “There was a huge shortage in the earlier months but now we are experiencing a peak period. A peak period refers to when we would have an increased flow of foreign currency in our system.
“If we have a lot then we can afford to sell the US dollar at a cheap rate. If there is not enough in our system then the price would obviously increase. Now a peak period usually lasts for a while, maybe from June to August but with the rate at which things are going, that is if we take into account Guyana’s current regional blacklisting status, our peak period may be short lived.
“That is not usually the case. Foreign exchange rates fluctuate for a number of reasons. There is a shortage of currency in the system because of the effects of Guyana’s status and that is slowing down the rate at which the foreign currency enters the economy.
“Currently we are selling the US dollar at $206 and that’s only because of the peak period.”
Acting Governor of the Central Bank, Dr. Gobind Ganga, told this publication yesterday that there is a shortage of foreign currency in the system but it is due to a number of reasons.
He said, “There are a number of reasons why there is a shortage. You have the elements of people hoarding money and then there are the effects of the AML fiasco. It is essentially slowing up the rate at which the currency enters our system but what I can say is that on behalf of the Bank of Guyana there is enough foreign currency in the system for circulation purposes. We are managing with it.”