Foreign currency controls…Money transfer service hid US$50M from Central Bank

Feb 03, 2017 News

Amidst growing challenges brought on by the economic decline in several neighbouring countries, Government has announced plans to conduct stricter monitoring of financial institutions to guard against a run in the

The exchange rates at downtown cambios yesterday.

foreign exchange rate.
Already, one multi-national company that runs a popular money transfer service, has been written to an ordered to sell to commercial banks.
It is believed that more than US$50M was withheld from the commercial banks last year, exacerbating an exchange rate situation which has seen it inching upwards. Yesterday, it was at $215 to one US$1. It was at around $205, earlier last year.
In the last few weeks, as worry grew among some businesses, Government made it clear that there is no shortage of foreign currency.
Rather, there were duplications in the applications and a rush for US dollars by a few large companies.
Recently, as the Bank of Guyana investigated, it was found that a Trinidad-based company which also operated the money transfer business, has not been selling its US and other currencies to the commercial banks as is required.
Rather, the foreign exchange was circulated among its local subsidiaries.
The amount that the commercial banks lost out was more than US$50M, Kaieteur News was told yesterday.
Governor of Bank of Guyana, Dr. Gobind Ganga, yesterday declined to go into details, but insisted that Central Bank has taken some actions with regards to the money transfer service.
He said that some guidelines have been issued to better protect the foreign exchange market.
The matter is of huge concern to the government.
On Tuesday, Finance Minister, Winston Jordan, briefed Cabinet. The Finance Minister assured that there was no shortage, says Minister of State, Joseph Harmon.
He was yesterday speaking at post-Cabinet press briefings at the Ministry of the Presidency.
It was disclosed that Bank of Guyana, as the regulatory body for financial institutions and non-bank cambios, has been told to respond to the situation with stricter regulations and closer monitoring.
Central Bank is expected to issue a number of guidelines, with regards to the new regulations and monitoring, Minister Harmon said.
These would include ensuring that exporters repatriate their export earnings to the banking systems as is required and conducting close monitoring and examinations of bank and non-bank cambios to maintain market stability.
Measures will also be taken to ensure that all foreign loans and grants are disbursed on time so as to increase the flow of funds currency to the country.
According to Harmon, Government is cognizant of the currency shortages in Suriname, Trinidad, Barbados, Venezuela and Brazil and that operators would have capitalized on opportunities in Guyana.
He admitted that Cabinet has been briefed about a foreign company withholding its money and not selling to the local banks.
A number of large companies which had been remitting profits abroad have not been helping the situation. These include phone companies.
A recent purchase by Banks DIH of shares from a Barbados company to the tune of US$25M also left a void in the supply.
Lower world prices for commodities, including oil and rice, have created major problems for countries in the region.
Guyana’s saving grace has been gold which has touched record production levels.