GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­lessar@guardian.co.tt

Fi­nance Min­is­ter Colm Im­bert has an­nounced plans to con­sult with stake­hold­ers on chang­ing the method for al­lo­cat­ing for­eign ex­change. The dis­cus­sions will out­line the path to­ward achiev­ing eq­ui­table dis­tri­b­u­tion.

For 25 years, an “ho­n­our sys­tem” has been in place for the dis­tri­b­u­tion of for­eign ex­change by com­mer­cial banks in T&T. How­ev­er, with busi­ness­es clam­our­ing for more forex to be made avail­able, Im­bert has an­nounced a pos­si­ble plan to “reg­u­larise” how this is done.

This move can take ef­fect af­ter con­sul­ta­tions with stake­hold­ers, which can con­clude as ear­ly as the end of this year, Im­bert said while speak­ing at a vir­tu­al press con­fer­ence yes­ter­day on fi­nan­cial is­sues.

In ex­plain­ing the “ho­n­our sys­tem,” Im­bert said, “It is ex­pect­ed that banks would ex­er­cise re­spon­si­bil­i­ty, eq­ui­ty, jus­tice, and all that sort of thing in the dis­tri­b­u­tion. They can go to the oth­er ex­treme, which they have not done yet, where they can par­tic­u­larise, for ex­am­ple, that a per­cent­age of this US $100 mil­lion that is put in every month should go to small and medi­um en­ter­pris­es, should go to ed­u­ca­tion, should go to med­ical ex­pens­es, should go to trav­el, should go to im­ports for man­u­fac­tur­ing,” Im­bert said.

He said his min­istry was ex­pect­ed to have dis­cus­sions with stake­hold­ers from dif­fer­ent busi­ness cham­bers, the T&T Man­u­fac­tur­ers’ As­so­ci­a­tion (TTMA), and oth­er in­ter­est groups. Im­bert said one of the ques­tions to be asked was whether these en­ti­ties be­lieve this “ho­n­our sys­tem” should be­come more reg­u­lat­ed and struc­tured, where­by the Cen­tral Bank would now have cat­e­gories of dis­tri­b­u­tion for for­eign ex­change.

“And I ex­pect I will be able to com­plete those dis­cus­sions maybe by the end of this year, and then I would see whether we change the for­mat by which the forex is dis­trib­uted,” the min­is­ter added.

Im­bert made it “crys­tal clear” that as fi­nance min­is­ter, he had no in­put on how forex is dis­trib­uted. “I don’t have a pool of for­eign ex­change in my of­fice or in this build­ing or in the Trea­sury where when some­one re­quires for­eign ex­change they ap­ply to the min­is­ter of fi­nance or the per­ma­nent sec­re­tary in fi­nance or any­thing like that. That’s not how it’s done,” Im­bert said.

He ex­plained that when tax­es are paid in US dol­lars, they go in­to a spe­cial ac­count at the Cen­tral Bank, which con­sti­tutes the coun­try’s or the Gov­ern­ment’s for­eign re­serves. The Cen­tral Bank, Im­bert said, from time to time, which can be every three weeks, would in­ter­vene and re­lease for­eign ex­change to the com­mer­cial banks based on a for­mu­la that takes in­to ac­count the size of the bank, num­ber of branch­es, and cus­tomers, among oth­er fac­tors, en­sur­ing that each bank gets a pro­por­tion of that amount.

“Let’s say the Cen­tral Bank dis­trib­utes US $100 mil­lion every two, three weeks to the com­mer­cial banks. Maybe the largest bank in the re­pub­lic might get 20 per cent of that, so $20 mil­lion, and then FCB might get $15 mil­lion, Sco­tia might get $17 mil­lion ... It’s a for­mu­la that has been in ex­is­tence for many years,” Im­bert said.

He added that part of the dis­tri­b­u­tion process, as stip­u­lat­ed by the Cen­tral Bank, is the rate at which the banks can sell the forex, as well as the pref­er­ence to trade or busi­ness.

Im­bert said oth­er pref­er­ences would be med­ical ex­pens­es over­seas and tu­ition for stu­dents study­ing over­seas. He said an in­stance in which forex would not be giv­en would be if “some­one want­ed to buy a con­do­mini­um in Mi­a­mi.”

In 2023, the fi­nance min­is­ter said to­tal forex in­ject­ed in­to the sys­tem, through the Ex­im­Bank and through the Cen­tral Bank, was close to $2 bil­lion, or a “lit­tle more.”

“And we have been av­er­ag­ing around $1.8, $1.9, some­times $2, and we went to $2.4 bil­lion quite re­cent­ly per year in US dol­lars. That does de­plete the re­serves, of course, but we have been fac­ing this sit­u­a­tion since we came in 2015, and we have man­aged it. We have man­aged the process where we have not run out of for­eign ex­change,” Im­bert said.

He added that the Gov­ern­ment has come up with many dif­fer­ent and in­no­v­a­tive ways of re­plen­ish­ing those re­serves. Re­gard­ing en­er­gy com­pa­nies op­er­at­ing in T&T, Im­bert said he al­so in­tends to meet with them to en­cour­age them to pay their tax­es in US dol­lars.

Mean­while, the Op­po­si­tion is not con­vinced that Im­bert has a so­lu­tion to the prob­lem.

UNC Chair­man Dave Tan­coo not­ed that one year ago the min­is­ter an­nounced plans to meet with forex stake­hold­ers. At the time, Im­bert lament­ed the strain on­line shop­ping had on the coun­try’s forex sit­u­a­tion.

Tan­coo wants to know whether the min­is­ter has host­ed any meet­ings since then. De­scrib­ing it as “the hege­mo­ny of the forex ca­bal,” the Oropouche West MP said that af­ter a decade as Min­is­ter of Fi­nance, Im­bert is com­fort­able main­tain­ing the sta­tus quo for the ac­cess and dis­tri­b­u­tion of for­eign ex­change.

BATT: Mem­bers man­age al­lo­ca­tions in com­pli­ance with CB poli­cies

Im­bert’s press con­fer­ence came short­ly be­fore the Bankers’ As­so­ci­a­tion of T&T (BATT) is­sued a state­ment main­tain­ing that its mem­bers man­age their for­eign ex­change al­lo­ca­tions in com­pli­ance with poli­cies from the Cen­tral Bank.

BATT said while it was acute­ly aware and is al­so deeply con­cerned about the on­go­ing for­eign ex­change chal­lenges fac­ing the coun­try, its mem­bers op­er­ate in com­pli­ance with le­gal reg­u­la­tions. It ex­plained the for­eign ex­change man­age­ment process ob­served by all banks, which in­cludes:

1. A fixed-rate for­eign ex­change al­lo­ca­tion pro­vid­ed by the Cen­tral Bank. 2. An oblig­a­tion pre­scribed in reg­u­la­tion for banks to sell for­eign ex­change to the pub­lic at a spec­i­fied spread. 3. Com­mer­cial banks are al­so pro­hib­it­ed by reg­u­la­tion set by CBTT from pur­chas­ing for­eign ex­change above a spec­i­fied rate. 4. Reg­u­lar dai­ly re­port­ing to the CBTT from pur­chas­ing for­eign ex­change above a spec­i­fied rate Recog­nis­ing the struc­tur­al fac­tors that are con­tribut­ing to the forex chal­lenges, BATT said it re­mains ea­ger to con­tin­ue dis­cus­sions with the Gov­ern­ment and Cen­tral Bank.