–Gov’t, Central Bank slam KN story of shortage
FINANCE Minister Winston Jordan and Bank of Guyana Governor Dr. Gobind Ganga have both dismissed claims carried in a Kaieteur News report of Tuesday, December 6, that there is a
shortage of foreign exchange in Guyana.
“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,” Minister Jordan revealed on Tuesday.
Appearing under the headline “Major foreign currency crisis looms”, the Kaieteur News’ article contended that a number of local banks had confirmed that, for the first time in years, they are restricting customers who want to remit large sums of money abroad to pay for services and goods, among other things.
“Some of them are even calling cambios and each other for supplies. The shortage has been exacerbated by a number of factors, not least among them the severing of ties of a number of foreign banks with local financial institutions”, the article stated.
CARICOM Heads met earlier this year to discuss strengthening efforts to address the withdrawal of correspondent banking services from large international financial institutions –- a term referred to as de-risking; but Minister Jordan explained that when the holdings by commercial banks are taken into consideration, foreign reserves have also increased in the system — from approximately US$955M at the end of 2015 to US$1.042B at present.
As such, he noted, there is no shortage of foreign exchange; which therefore means that there is no “foreign exchange crisis looming”, and there is no need for the currency to depreciate. He said the Bank of Guyana would take all necessary actions to protect the currency and the reserves it has.
Governor of the Bank of Guyana, Dr. Gobind Ganga, concurred with the minister’s explanations at foregoing, and said there is no reason for concern. “There is no foreign currency crisis looming in Guyana!” he said, as he deemed the article misleading.
Further, he pointed out that Guyana has a net supply of foreign currency in the system, and this means that there is no need for 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”, Dr. Ganga emphatically stated.
Moreover, he provided details which illustrate that the current foreign exchange reserves held by the Bank of Guyana and the commercial banks are in excess of the 2015 figures, as was also articulated by Finance Minister Jordan.
Dr. Ganga said commercial banks have increased their foreign exchange holdings with a gross holding of US$357M in 2015, which moved to US$388.4M as at September 2016. He further added that it is expected that commercial banks will hold approximately US$403M by the end of this year.
“The (commercial) banks have money, and they have quite a lot. It is not a small amount,” Dr. Ganga said.
INCREASE IN TT, BARBADIAN CURRENCIES
Meanwhile, Dr. Ganga revealed that there has been an increase in the circulation of Trinidad and Tobago and Barbadian dollars in the Guyanese economy; and this, he said, indicates that these currencies are being converted into Guyana dollars then used to purchase US currency.
Dr. Ganga explained that Guyana has had, since 2014, a significant supply of CARICOM currency in its system. This was evident in the fact that, in 2014, Trinidad and Tobago dollars increased from TT$9.1M to TT$24.4M in 2015; and in November of 2016, the sum of TT$38.3M was in the system.
Guyana also recorded a significant inflow of Barbadian dollars, which increased from $8.3M in 2014 to $13.5M in 2015. As at November 2016, the amount stood at $12.3M.
Dr. Ganga has also noted that Suriname has had major issues, and this trend of currency conversion has also been discovered at the border, where there is a conversion of cash from Guyana dollars to US dollars, which are being repatriated to Suriname.
Finance Minister Jordan has committed to ensuring that this issue is addressed at the soonest possible time. “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,” Minister Jordan said.
