THE Private Sector Commission (PSC) said it has read with consternation the pronouncements of the Minister of State, Joseph Harmon, regarding the introduction of stricter regulations and closer monitoring of the foreign exchange market in Guyana. In a release, the PSC “strongly condemns this move by the Government, which would have the certain effect of accelerating the capital flight which has already begun with the erosion of confidence in the economy.
“The Private Sector Commission also warns against the stated intention of Government to introduce restrictions preventing the unfettered repatriation of earnings of foreign companies operating in Guyana. Foreign direct investment in the economy has already slowed and a policy which prevents the repatriation of the earnings of these companies has the potential to move the influx of investment from a trickle to a halt. The Private Sector Commission wishes to remind Government that the country has gone down this path before with disastrous consequences to the economy. The Guyana economy can ill afford the certain deleterious effects of history repeating itself,” the PSC said.
On Thursday, Harmon told a post-Cabinet media briefing that Central Bank is expected to issue a number of guidelines with regard to the new regulations and monitoring. These includes ensuring that exporters repatriate their export earnings to the banking system as is required and conducting close monitoring and examination of bank and non-bank cambios to maintain orderly behaviour.
“Measures will also be taken to ensure that all foreign loans and grants that are issued are disbursed on time, so as to increase the flow of foreign currency to the country,” Minister Harmon told reporters.
Even though the Bank of Guyana maintains that there is no shortage, some commercial banks have stated otherwise. There is a belief that the commercial banks are siphoning foreign exchange to selected customers and clients. When asked how the BoG will deal with this, Minister Harmon said more oversight will be required. “It is the quality of the oversight which the Central Bank has been engaging in over the operations of these banks and non-bank cambios. I think what the minister has recommended is that the bank strengthen its monitoring capacity and ensure that the rules and regulations by which these banks operate, that they hold them on a much closer, tighter leash.”
He added: “The fact of the matter is, yes, there are some companies that have actually been sending large amounts of foreign currency abroad, because when you examine the situation all around us, in the entire Region, you have foreign currency issues in Suriname, in Trinidad, in Barbados, in Venezuela, in Brazil.”
Over the past few weeks, it has been reported that there is a shortage of foreign currency, specifically U.S. dollars, here, but BoG Governor, Dr Gobind Ganga, has said that Central Bank is not aware of such a situation. Finance Minister Winston Jordan had said there are six banks, 13 non-bank cambios and the BoG and noted that there are exporters, importers and other participants in the foreign exchange market, who conduct business with commercial banks or cambios of their choice. He had noted that large spreads between the buying and selling rates for foreign currency, especially in bigger banks, have led to some level of disintermediation.