Since banks are now T&T’s new “massas” and czars,” the Central Bank should ensure there are regulations to make banks provide foreign exchange to people who need to buy medicine or send children to school overseas, says Independent Senator Dr Varma Deyalsingh.
But Public Administration Minister Allyson West has said rather than dictate to banks, Government tries to influence how they do what they do – but didn’t think the state should step in and dictate to banks how to distribute forex.
Nor would Government devalue the T&T currency, since that will cause imported inflation, she added.
Both spoke in the Senate on Tuesday on a private motion for Government to lay in Parliament, within six months, a comprehensive policy framework that will guide key stakeholders, including banks, on how Government intends to navigate tightness in the forex market.
Deyalsingh said while Government has done a lot on forex issues, if banks are given forex to distribute, Government is duty-bound to see if there are people grumbling about shortages and feeling disenfranchised.
He said some people go overseas for treatments or send children to school overseas, but some have to beg for forex and humiliate themselves.
He said the Finance Minister may not want to put restrictions on banks but a policy from Central Bank (CBTT) may be needed to direct that banks must accommodate when people apply for funds for health or university reasons.
“This should be a CBTT regulation if Government’s hesitant to widen the scope of banks,” he added.
Deyalsingh said in the 1970s Black Power revolution period, there were complaints about banks’ hiring practices, which left a lot to be desired “Now, banks are the new czars in the game, the new massas who control who gets forex or not,” he said.
Justifying the term “czar,“he said in a parliamentary committee meeting, a Bankers’ Association vice president said bank managers determined forex distribution. Therefore, he said a policy’s needed and banks may have to be told to listen to these cases.
Deyalsingh recommended a social justice policy for forex allocations which shouldn’t be left to be guided by the market alone. He supported regulations for banks, which he said “have become masters of their own right which might be a disadvantage for the population.”
There should also be investigation of claims forex is being sold on the black market and some people get a “cut.”
He added that as a doctor, it didn’t seem right to him that “it’s easier to bring in alcohol than register to bring in medicines.”
Minister: Devaluation will cause imported inflation
Minister West said dictating to banks who to allocate forex will take T&T back to a time when Government sought to control many things in the economy which ended up floundering. To say Government should control who gets forex is to “take us down a path I don’t think we want to go ... do we reintroduce food price control, widespread rental control where does it end? That isn’t the way to go, in this administration’s view.”
In 2020, the CBTT estimated forex sale to the public by authorised dealers was $4.5 billion. West added the CBTT continues injecting forex to improve stability and availability.
Arguing against the “hair-on-fire crowd’s call for devaluation,” she said that would result in imported inflation and T&T’s a substantial importer, particularly most food and medicine.
She said Government successfully managed the economy during the difficult pandemic period and “we’re starting to emerge” from the most catastrophic effect. But the war in Ukraine will bring increases in several staples’ prices.
West said Government will take into consideration impact on citizens to protect the vulnerable from high price increases due to volatility on the forex market.
She noted devaluation in Suriname took their dollar from $7.5 to (US) $1 to $21, increasing cost of living and utility services by 90 per cent.
“These are the kind of situations Government’s trying to avoid,” she noted.
