Latest update November 29th, 2024 1:00 AM
Begin conserving foreign exchange
Dear Editor,
For small open economies like Guyana, the need for careful management of our scarce foreign exchange resources must always remain paramount given, the vagaries of the international trading environment.
Perhaps we have not been paying close attention but since the announcement of the discovery of oil in Guyana, there has been an upsurge in consumer imports by both local but especially by foreign-owned businesses that are using up our scarce foreign exchange and eventually shipping it out back to their home countries as well as to North America.
We may recall that not so long ago, regional businesses operating in Guyana were buying up our U.S dollars and shipping them out, forcing the Central Bank to intervene in order to bring some semblance of stability to the local foreign exchange market.
And now, just a few days ago, there appeared an article in the local media concerning a recent visit to Guyana by a team from PriceSmartInc, reputed to be the largest membership warehouse club in Central America and the Caribbean.
By paying an annual membership fee, shoppers at PriceSmart can engage in bulk buying at prices lower than what obtains in the regular supermarkets and stores and are able to access a wide range of consumer goods like food items, vegetables, electronic and other household items.
Consumers can, therefore, reap significant savings by shopping at PriceSmart as some Guyanese might have experienced when shopping at wholesale clubs such as Costco and BJs Wholesale in the United States.
In the Guyana context, these wholesale clubs by the sheer volumes of their imports, are likely to consume massive amounts of foreign exchange while at the same time not bringing in any to meet their needs.
Just a few years ago, data released by the Central Bank of Trinidad and Tobago indicated the staggering amount of foreign exchange that PriceSmart was utilizing at a time when the country was experiencing a severe shortage of U.S dollars.
We all know what a shortage of U.S dollars can do to our exchange rate based on our own experience over the past several decades.
Experience in other Caribbean countries has also shown that these wholesale clubs hardly provide any support to the local agricultural community, instead importing most of their supplies from overseas, including items such as vegetables, fish and meat products.
It would seem that the time is now ripe for the Government of Guyana to carefully screen foreign investors seeking to do business in our country to ensure that those wishing to do so can only engage in enterprises that are net earners of foreign exchange rather being net consumers of foreign exchange. Many years ago Guyana, through the Guyana Marketing Corporation, engaged in import substitution activities through the production of a wide range of products such as hams, bacon, sausages, juices, etc.
With Guyana’s massive agricultural resource base, it is time that agro-processing be brought on to the “front burner”, thereby enhancing the livelihoods of our farmers and other small business persons.
We cannot continue to allow our fruits and vegetables to be rotting on the Stabroek Market wharf while importing juices, jams and jellies from overseas. As a policy measure, it is time that Guyana restricts investment in the retail and distributive sectors to Guyanese.
We are already witnessing how our indigenous businesses are being forced out of Regent Street and around Georgetown by foreign-owned retail businesses and this must be brought to an end, otherwise one morning we will wake up and find all of Georgetown in foreign hands. I trust that our Minister of Business and our Minister responsible for Immigration are taking note.
Finally, for those who overlook the importance of prudential foreign exchange management, let me remind you that only a few years ago, our neighbours in Trinidad and Tobago used to boast that “oil don’t spoil” and were quick to offer you a shot of Old Parr Whisky from their “Carry-on” bags on the flight to Miami. But alas! A word to the wise is enough.
Yours sincerely,
Steve Fraser
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