Following a series of complaints by members of both the Private Sector Commission (PSC) and the Georgetown Chamber of Commerce and Industry (GCCI), Chairman of the PSC, Paul Cheong, on Friday said that they have written to the Guyana Association of Bankers Inc (GABI) requesting a meeting.
Speaking with the Sunday Stabroek, Cheong said that with conflicting reports circulating in the public domain, they thought it best to meet the association to have the claims addressed.
He noted that as recent as Friday, he had received a complaint of no foreign currency being available at some banks.
The PSC Chairman said that after they meet with the association, the commission would be in a better position to take a stance on the issue.
Meanwhile, Minister Oneidge Walrond, who holds the portfolio for trade, on Friday said she has not received any complaints from businesspersons or organisations of any currency shortages. She stated that if she did, her first action would be to contact the governor of the central bank.
Friday’s Stabroek News reported on complaints from the business community even as Central Bank Governor, Dr Gobind Ganga, refuted the claim and assured that there is no shortage of foreign currency, specifically the US dollar, at local banks.
“There is no shortage. What you will probably have is an instantaneous shortage but everyone has enough…” Ganga said in an invited comment responding to Stabroek News queries.
According to a Department of Public Information (DPI) press release on Friday, the BoG informed that as of February 22, 2023, the banking system had US$99.5 million available for transactions. “BOG would like to state that while the available funds are not evenly distributed among the banks, there is enough to cover the cash flow needs of transactions arising from businesses in Guyana.”
The BoG also explained that cash flowing to the banks is cyclical, and as such there will be periods of excess liquidity and periods when there will be a limited supply. It however assured that it continues to monitor the foreign currency position in Guyana to ensure there is no disruption nor adverse impact on economic activities.
BoG’s assurances notwithstanding, the reported shortage of US$ is even more puzzling as large amounts of that currency from oil proceeds were tapped from the Natural Resource Fund last year and the beginning of this year. This year, roughly US$1 billion will be filtered into the economy from this Fund.
Analysts have pointed out that there are clear imperfections in the foreign currency market here and as such, greater interventions by the Central Bank may be needed.
While businesses have been reporting to the GCCI about a shortage, its President Timothy Tucker experienced it for himself last week while at the bank.
Disappointed
Tucker told this newspaper on Friday that he was disappointed to learn the Bank of Guyana Governor is not in a position to fully address the situation of hoarding and banks’ foreign exchange investment outside Guyana.
“The local banks are taking depositors’ cash and buying foreign currency and making investments overseas. If there is a loss who is going to stand that loss? These investments outside of Guyana are not protected by the insurance they have taken out for Guyana. We need better monitoring and security over these operations”, he asserted.
In a Facebook post Tucker stated, “Got to love doing business in Guyana. Bank of Guyana: There’s no USD shortage. Me: A waiting Two weeks for a Commercial Bank to get USD for a wire transfer to pay a supplier.”
His experience was similar to that of businessman, Terrence Campbell, who also said that just about a week ago, one of the local banks could not process a payment of just over US$90,000 to his supplier. In light of this dilemma, the businessman has called for a thorough investigation into the banking sector to identify the reason behind the shortages.
Stabroek News understands that businesspersons have been complaining about the US currency shortage since last September, even at a time when the local banks were saying there wasn’t any.
Campbell averred that if the shortages continue, the Guyanese people must know what the macro-economic implications we face are, and how they can be addressed. He expressed concern that while investors are coming (and one would expect them to bring their money), they are borrowing from local banks, thereby putting local businesses at a disadvantage. The businessman also questioned whether there may be some sort of revenue leakage in the country given that billions were allegedly sent to China via money laundering.
Stabroek News was told that some banks are giving foreign investors priority and in some cases, even hoarding to facilitate large payments for clients. It was explained that due to agreements made with foreign banks, the local banks will honour the agreement to the benefit of the customer, which unfortunately redounds to the detriment of local businesses.
Tucker further called on the Bank of Guyana to implement modern monetary policies that will address these shortcomings and facilitate the movement of cash among banks. He also suggested that the Central Bank should monitor how banks are utilising their foreign exchange and whether they are using monies generated from Guyana to fund external operations and investments.
“The Bank of Guyana needs to look at the entire sector and its needs and develop monetary policies and monetary regulations. They cannot be a reactive body.”
Under Tucker’s Facebook post, Financial Analyst, Joel Bhagwandin stated, “The bank is aware but denying it for some strange reasons. I can’t get into the details but I’ve personally been fighting this. Been monitoring since 2017. I’ve raised it at the highest level. The buck stops at the regulator and the regulator, instead of doing its job, have been transferring key functions it ought to carry out, to the commercial banks. The BOG needs to step up.”
