Currency woes will see…A booming Black Market trade

Currency woes will see…A booming Black Market trade – Jagdeo warns

Mar 24, 2017 News

By Abena Rockcliffe-Campbell
Guyana is facing a real problem that have a devastating domino effect. There will be a reemergence of the underground economy and a parallel market. There will be less tax income and the cost of living will go up.

Opposition Leader, Bharrat Jagdeo

The Government of Guyana could have contained this situation, but either its incapability to do so or its lack of interest is to be blamed for what is to unfold, said Opposition Leader, Bharrat Jagdeo.
At yesterday’s press conference held at Freedom House, Jagdeo was talking about the fact that Guyana’s dollar value has declined. The exchange rate is rising.
Jagdeo told the media that the government’s denial of the “fact” that there is a foreign currency shortage is proof alone that “these people don’t know what they are doing.” The Opposition Leader said that a simple comparison of the balance of payment figures published by the government will show a reduction in foreign currency inflows from most sectors.
Jagdeo continued, “This government will harm all of our futures…It’s either they are unconcerned or incapable of addressing the problem the way it should be addressed.”
Jagdeo said that the urge to hoard foreign currency is picking up because of an expectation that the rate is climbing.
He added that the statement that the GYD$230 rate of exchange is only for credit card transactions is nonsensical. “It is almost criminal to say that that is the case because the reality is different and everyone who has gone to buy some currency knows this is the case, except the Ministry of Finance.”
Jagdeo said that the government is now “bullying” the commercial banks not to sell for more than $215.
“This morning they sent people out to talk to the non-bank Cambios to tell them if you sell beyond $215 it will affect your licence. If they think that this is going to calm the rate, they are wrong. It will drive more fear into people and cause further panic.”
Jagdeo went on to say “They are saying you can buy maximum for GYD $212 so you can sell for $215. If the people do that, those who have foreign currency will just sit on it. No one will sell at that rate when they can sell at a higher rate.”
Jagdeo foretold that there will be a reemergence of activities such as what goes on at America Street. “A lot of the transactions will come out the Cambios and banks and go on the streets, underground economy once again.”
The politician added that cambio owners will try to cheat the system. “They themselves will post one rate on the receipt but take more…This simply causes the government to lose taxes…This full fledged panic approach will not work; a parallel market will develop.”
Jagdeo said that the possibility exists that the market may have cleared at $210 or $230 but the “panic actions will make it climb further. The projections are unbelievable $250, $300. They are driving the market into a full-fledged panic and you will see the reemergence of a blackmarket. It will affect everything else.”
Jagdeo said that the cost of inputs, the cost of machinery and the cost of living will all be affected. “So the little increases that they boasted about will all be wiped out in real terms,” said Jagdeo.
He explained that in real terms people are going to be earning less in US dollars than before. “Salaries are probably 10 per cent less than two years ago in US dollar term. It will only get worse.”