-commercial banks to meet to determine standard exchange rates

SEVERAL factors including the hoarding of foreign currency from the local market, underperformance of the export sector as well as an additional demand for foreign currency are affecting the stability of the foreign exchange rate.
Against this backdrop Minister of Finance, Winston Jordan, told the press on Friday afternoon that the government will explore all options to stabilise the value of the Guyana dollar.
At the same time, the commercial banks are expected to meet next week with the Central Bank and all parties are expected to determine and agree on a standard foreign exchange rate for transactions.
This was disclosed on Friday afternoon after officials of the Guyana Association of Bankers met with Jordan and Minister within the Ministry of Finance, Jaipaul Sharma, Dr Gobind Ganga Governor of the Bank of Guyana and other officials in the ministry’s boardroom on Main Street in the capital.
While the exchange rate at some commercial banks hovered at G$208/G$210 to US$1 this week , recent reports in some sections of the media suggested that the value of the Guyana dollar had depreciated to various rates, including G$230 and G$250.
However, according to Jordan, the two figures quoted are for an online transaction, while another was being charged by an airline for ticket transactions.
He said the country is experiencing a “dry period” as regards the availability of foreign currency. According to him, during the meeting with bank officials, the banks indicated that one factor which is contributing to the problem is that exports have dropped, a scenario which he admitted is known to the ministry. Since sugar is not doing as well as it should, the rice market is in a similar situation, while gold is the only mineral in the mining sector which is performing, he said the ministry is aware of the situation. He said gold is the only export which is out-performing the other sectors of the economy.
According to the Finance Minister, the banks also suggested that there are additional demands for foreign exchange from the local market. ”They feel there might be some type of hoarding,” he said. In addition, Jordan said gold dealers may not be declaring production as they , while there are the holders of retention accounts who are buying foreign currency from the local market.
“There is a mismatch between supply and demand “, he said, noting that commercial banks are knowledgeable of the situation on the ground.
The banks, the minister said, have agreed to meet more frequently and the Central Bank has agreed to provide support to such meetings.
Given the situation illustrated by the banks, Jordan said that the government “can do everything possible.” He said that the options available include ensuring that the Central Bank sellsforeign currency to the local market, a move which he noted the commercial banks indicated is not a first option at this time, since the situation would have to warrant such a move.
In addition , he said that a number of persons hold retention accounts at the commercial banks, which he said have been “parked” and such persons are now “ trying to jump into the market. “
Jordan explained that retention account holders are afforded the “privilege” at the behest of the Central Bank to retain such monies at the commercial banks. He said some of the account holders are net earners of foreign currency and such persons are now taking advantage of the ongoing dry period on the foreign currency market.
He said the Central Bank will “do some talking “with the holders of such accounts, noting that the bank can consider implementing temporary measures as regards such accounts.
During the press briefing, Dr Ganga gave the reassurance that there is no foreign currency “crisis.” As regards air carrier Dynamic Airways, he said the airline may have illegally upped its firing exchange rate regarding ticket prices, where the problematic airline has been charging a G$250 to US$1 rate.
Reports on Thursday are that Roraima Airways , the local handling company of Dynamic , informed travel agencies that the carrier’s tickets must be sold at the new rate of G$250 , a rate which it arrived at after making similar increases within the matter of days.
Dr Ganga said that the rate would be “less competitive” for the problematic airline, a move he termed illegal, since according to him, the entity should utilise the Central Bank exchange rate which he termed an advertised rate.
Meanwhile, Minister Jordan noted that the government will continue to undertake its mandate to improve production in various economic sectors of the economy. “We are trying to do some work with sugar,” he said.
He said that he met with the Berbice Chamber of Commerce on Friday morning and officials of the body informed him that they prefer the Guyana Sugar Corporation being privatized, but with certain conditions. Noting that the Skeldon sugar factory may be a prime candidate for privatisation, he said that there are interests in various parts of GuySuco.”That would take a load off of our hands as it relates to continuous transfers “, he noted.
He said that production in the rice sector appears to be improving as compared to 2016 and he noted that there are other crops which can be cultivated under a plantation-type agriculture method, such as coconuts and pineapples, which can bring foreign currency into the country. “For us to go and get investment, plantation-type agriculture is the way to go ,“Jordan said.
He said the two large- scale gold-mining firms, Troy Resources and Guyana Goldfields Inc., are at production stage while manganese mining would be on stream in 2018.
As regards communication with the local business bodies, the Guyana Manufacturing and Services Association and the Private Sector Commission (PSC), Jordan said that he has an open-door policy as regards interaction with the two entities.
He said he tried unsuccessfully to meet with the PSC in the recent past, while the GMSA has not contacted the Finance Ministry in recent times, including about its concerns on the economy.