Latest update February 8th, 2025 5:56 AM
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Govt. targets US dollar accounts, other measures to control foreign currency “slide”
-exports shortfall last year was US$30M-$40M
Government has not ruled out taking a tough stance on US dollars account holders who hoard and abuse the system by applying to the market for transfers.
Government officials and the representatives of the commercial banks at the meeting yesterday.
The announcement was made yesterday by Government following a meeting with bankers to determine what exactly is happening with the foreign currency trade.
The administration, on one hand, is insisting that there is no shortage of US dollars. It bases this on figures being supplied by commercial banks which indicated that there is almost US$13M at the banks for trade and roughly around the same amount in commitments (applications for transfers, drafts).
Yesterday, amidst worry by businesses and the administration, Finance Minister, Winston Jordan; Junior Minister, Jaipaul Sharma and Central Bank Governor, Dr. Gobind Ganga, met with representatives of the commercial banks at the ministry’s Main Street boardroom.
After that meeting, in engagements with the press, the government officials seemed clear that some advantage was being taken on the trade and that in the coming days a number of measures will be introduced to stabilize the situation.
According to the Central Bank head, there should be no cause for alarm.
Earlier this week, a statement from the Guyana Manufacturing and Services Association (GMSA) in a statement called for Government to take action, with selling rates for US at an all-time high of US$1 to G$230. Prior to that, there have been complaints by businesses of being unable to access foreign currency for transfers.
However, Government insisted that the rate was around $215 with that $230 rate for Visa and other credit cards- a miniscule amount in the bigger trade.
Jordan made it clear that the situation would have arisen in two of the leanest months of the year- January and February.
Last year, top earners like sugar, rice and bauxite performed badly with export revenues for the country seeing a decline of between US$30 and $40M.
Central Bank had stepped in from time to time and injected monies, almost to the shortfall, to the banks to meet demands, Ganga disclosed.
Based on recent findings, there are indications that the demand and supply situation was further exacerbated by a number of businesses with foreign currency accounts which instead of using those funds, decided to apply in the normal market system for funds. This is hoarding, the officials stressed yesterday.
As early as next week, bankers will be meeting with Central Bank to continue strategizing.
According to the officials yesterday, with a free market like Guyana another situation has been that exporters are not bringing back all their earnings to Guyana. There is little that can be done to force exporters to bring back their monies.
These remittances are crucial to ensure there are enough monies to conduct transfers.
Another situation are that persons who are not normally known for large purchases of foreign currencies, have been doing so, placing more pressure on the supplies.
According to Minister Jordan, the bankers have made it clear that they are not interested if the situation continues as it can affect their asset base and spell major financial problems.
For the country, the implications are enormous. These include inflation, higher costs of inputs, the inability to remain competitive and even unemployment.
Banks may be looking to controls rates as part of the measures.
With regards to Dynamic Airways which has instructed travel agents to charge a $250 rate, Dr. Ganga believed that this could be illegal. He also said that move may force the airline to become uncompetitive, especially as other operators are between $210-$220.
Minister Jordan said that in the worst case scenario, there may have to be an official rate adjustment.
With regards to the US retention bank accounts, Jordan said that it was preferable that Government not use “a heavy hammer to kill an ant”. Rather, the route of using “moral persuasion” is preferable.
Ganga insisted that the country is not in a crisis situation, especially if it is taken into consideration what is happening to the neighbouring countries.
Indeed, Trinidad and Barbados have been running to Guyana to buy US dollars.
It is believed that at least one bank has been helping Trinidad via a number of companies based here.
Suriname and Venezuela have been facing serious troubles.
Central Bank has halted its trade with Bajan and Trinidad currencies.
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