In a bid to address the concerns regarding the shortage of foreign currency available for business transactions, the Private Sector Commission (PSC), along with the Guyana Association of Bankers Incorporated (GABI) yesterday met with Governor of the Bank of Guyana (BoG), Dr Gobind Ganga.
Coming out of the meeting, the PSC said it was agreed there is no overall shortage of foreign currency in Guyana despite there being a shortage at some banks. Nonetheless, the Commission committed to working with GABI and BoG to address the issues raised and promised to collaborate and work together for the benefit of all concerned.
It was noted that the aggregate supply of foreign exchange is meeting the aggregate demand and therefore the market remains in equilibrium.
“The Governor of the Bank confirmed that while there is an intra-bank market which enables banks to share, the Central Bank must rely on moral persuasion in an effort to achieve a more efficient distribution of foreign currency availability, while emphasizing the fact that it is the responsibility of the Central Bank to ensure that the Government meets its macro-economic objectives,” the PSC statement said.
Recently, several businessmen have complained of experiencing a shortage of foreign currency at local banks and the Georgetown Chamber of Commerce & Industry (GCCI) called out the central bank for not monitoring the system.
The GCCI had stated that it was dissatisfied with the BoG’s lack of action, vision, and modern financial policies to improve access to financing for local businesses. It added that the country’s economy was one of the fastest-growing in the world, with oil revenues generating hundreds of millions of US dollars annually.
The BoG in response however, reprimanded the GCCI for labouring under the mistaken impression that the central bank existed to ensure that foreign currency was available to its members at the times and prices they demanded.
According to the BoG, the GCCI’s view of the open market, “is simply not how an open market economy operates, and is simply not how foreign currency availability and pricing are determined where floating currencies are concerned.”
It suggested the GCCI’s “energies would be better spent engaging either the banks or the bankers association, who are also members of the private sector, with a view to better understanding the factors that influence the availability and pricing of foreign currency in the domestic market.”
The GCCI had argued that “According to its own statistics, the Bank of Guyana has failed to intervene in the ongoing foreign currency shortage issue, despite the private sector complaining of a lack of US dollars since 2019. Therefore, the Chamber views the central bank’s inaction to activate mitigating strategies to address the foreign currency situation as a disregard for business.”
Vice President Bharrat Jagdeo last Friday announced that government was mulling the adoption of a daily reporting system of foreign exchange, in order to have an understanding behind the alleged shortage. Jagdeo also stressed that the reserves had an adequate supply of foreign currency and should the need arise through continuous shortage, currency will be released into the market. He cautioned that any hasty release would cripple the manufacturing and exporting sectors as the cost for those services would increase.
He went on to state that while there is an aggregate market, the cambios operate like mini markets, truncating the supply and demand of foreign currency. He pointed out that if some banks did not keep currency for their customers, people would have been able to go to other banks and complete their business transactions.
In this regard, he posited, there needs to be better promotion of exchanges between banks and the use of the intermarket option.
The Vice President noted that the central bank’s objective was to focus on the macroeconomics of the country and that the chamber needed to iron out the issues being faced with GABI.
