Minister of Finance, Winston Jordan and Governor of the Bank of Guyana, Dr Gobind Ganga have rejected a claim in an article appearing in yesterday’s Kaieteur News that a major foreign currency crisis looms.
Dr Ganga however disclosed that there has been a rise in Trinidadian and Barbadian dollars in the economy which suggested that they are being used for the purchase of US currency here.
“There is no shortage of foreign exchange in Guyana, the reserves at the Bank of Guyana have improved from approximately US$598M at the end of 2015 to about US$625M at present, an increase of US$28M,” Jordan stated in a release issued by the Government’s Director of Public Information (DPI), Imran Khan.
Jordan was further quoted as saying that “when you consider the holdings by commercial banks, foreign reserves have also increased in the system from approximately US$955M at the end of 2015 to US$1.042B at present. Therefore, there is no shortage of foreign exchange, consequently, there is no foreign exchange crisis looming, and no need for the currency to depreciate. The Bank of Guyana will take all necessary actions to protect the currency and to protect the reserves at the Bank of Guyana”.
In the same release, Dr Ganga was quoted as saying “There is no foreign currency crisis looming in Guyana. It’s a misleading article, the headline is even more misleading. The fact is we have a net supply of foreign currency in the system, so there should be no depreciation of the currency by any significant amount”.
“It is not a situation where there is a piling up of demand for foreign exchange at the commercial banks”, he added, contending that “Commercial banks have increased their foreign exchange holdings. In 2015 they had a gross holding of US$357M, as of September 2016 it was US$388.4M and we are expecting the commercial banks to hold approximately US$403M by the end of the year”.
He added that the commercial banks have money.
“The Bank of Guyana had US$598M at the end of 2015, currently we are holding close to US$625M which is much more than last year. You can see therefore that there is an increase in foreign exchange availability from the holdings,” Dr Ganga asserted.
The BOG Governor said that a rise in the circulation of Trinidad and Tobago and Barbadian dollars in the Guyanese economy has been noticed and that this indicates that these currencies are being changed into Guyana dollars then used to purchase US currency.
“Since 2014 we have had a significant supply of CARICOM currency in the (Guyanese) system more specifically, for example, we had an increase in Trinidad and Tobago dollars from TT$9.1M in 2014 to TT$24.4M in 2015 and in November of 2016 TT$38.3M. You will find that it is very difficult to get foreign exchange in Trinidad in particular, so what is happening is that we have this flow of TT dollars coming into Guyana, converted to Guyana dollars and then used to purchase US dollars,” Dr. Ganga explained.
He added “We have also had a significant inflow of Barbadian dollars. From 2014 of BD$8.3M to BD$13.5M in 2015 and as at November 2016 it is at BD$12.3M. So you can see that we are also supplying foreign exchange to other countries in the region”.
Suriname, he said, also has major issues and at the border there is a conversion of cash from Guyana dollars to US dollars which is then repatriated to Suriname.
Jordan said that the issue will be addressed.
“The issue as it relates to the Trinidad and Barbados currencies flooding our market will be looked at and action will be taken to ensure that this occurs in a normal way rather than it being here just to buy up foreign currency,” Jordan stated.
Dr Ganga also said that that there is no problem with remitting monies, contending that all commercial banks in Guyana have at least one correspondent international bank.
