Central Bank rubbishes Jagdeo claims about low reserves

Jul 27, 2018 News

Opposition Leader Bharrat Jagdeo is of the firm view that there is a significant decline in foreign currency at the Central Bank. He believes that this is responsible for the recent crackdown against some businesses which are not registered cambios but are engaging in the changing of foreign currency to Guyana dollars.
At his most recent press conference, Jagdeo said, “…from all indications, they (government) have an unbelievable shortage of currency at Central Bank. The reserves are declining and they don’t have the money to meet obligations…We are going to see this evolve a bit more because you can’t hide this for long. This is not the end of the problem…”
When contacted yesterday to comment on this matter, senior Central Bank officials said that Jagdeo’s perspective couldn’t be further from the truth. The officials stressed that there is no “unbelievable shortage.”
One senior board member said, “Reserves go up and down all the time depending on the payments you have to make and I can tell you for a fact that the reserves are being prudently managed. Also, the crackdown on the currency exchange at certain places has to do with following the law. Must we allow certain practices to continue fearing what Mr. Jagdeo might interpret it to mean? Of course not! “
In an advertisement a few days ago, Bank of Guyana which is the regulator of commercial financial institutions and cambios licensed to trade in foreign currencies, said it has received credible information of use of foreign currency by unlicensed entities.
“The Bank of Guyana notes with concern that some businesses are accepting foreign currency for the purpose of settling payments for transactions – instead of Guyana dollars.”
While Central Bank Governor, Dr. Gobind Ganga would not immediately go into details during a recent interview on the matter, Kaieteur News has learnt from Government officials that authorities have been paying close attention to the Cuban traders in Guyana.
With Chinese retailers and wholesalers in recent years growing in number, especially along Regent and Robb Streets, Cubans, especially, have been coming here with the precious US dollars.
It is believed that upwards of US$2M alone in trade is being done with the Chinese stores each month. This does not include transportation to and from the Timehri airport and accommodation.
About 1,000 Cubans are said to be coming monthly, shopping accessories, clothing and other things. There have been complaints that the Cubans, unwilling to visit a Cambio or bank because of safety concerns, would hand over their US cash to the willing store owners. It is believed that a significant part of the monies are making it out of country, outside the normal channels, knowledgeable banking sources admitted.
However, Dr. Ganga stressed that he is not saying that it is only the Chinese stores that are involved. “We know lots of businesses are doing it. We are saying to you to please abide by the rules and regulations. We do have the mechanisms of surprise raids.”
According to the notice by Bank of Guyana on July 20 last, pursuant to Section (20) of the Bank of Guyana Act 1998, all monetary obligations or transactions in Guyana have to be settled in Guyana dollars.
“The Bank advises that only banks and licensed Cambios are authorized to conduct buying and selling in foreign currency. The Bank of Guyana Act 1998, and dealers in Foreign Currency (Licensing) Act 1989 provide penalties for violations, which include fines and imprisonment.”
The Bank warns that any person caught contravening the Bank of Guyana Act 1998 and the Dealers in Foreign Currency (Licensing) Act 1989 will be prosecuted.

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