Min­is­ter of Fi­nance Colm Im­bert is­sued a three-page me­dia re­lease yes­ter­day ad­dress­ing height­ened con­cerns about the avail­abil­i­ty of for­eign ex­change. 

Mr Im­bert’s Sun­day af­ter­noon state­ment fol­lowed yes­ter­day’s pub­li­ca­tion by the T&T Guardian of com­ments made by an In­ter­na­tion­al Mon­e­tary Fund (IMF) spokesper­son as well as an ed­i­to­r­i­al on this top­i­cal and rel­e­vant is­sue.

In his state­ment, Mr Im­bert gave his firm com­mit­ment to main­tain “our fixed ex­change rate to con­trol in­fla­tion” and that the Gov­ern­ment “will not im­pose hard­ship on the poor and vul­ner­a­ble,” by de­valu­ing or float­ing the TT dol­lar.

While Mr Im­bert’s em­pa­thy for this coun­try’s “poor and vul­ner­a­ble” is laud­able, the ques­tion be­comes how long can the Gov­ern­ment con­tin­ue to main­tain the fixed ex­change rate?

At a news con­fer­ence last Tues­day, Mr Im­bert dis­closed that T&T’s net for­eign re­serves are be­ing de­plet­ed by be­tween US$1.8 bil­lion and US$2.4 bil­lion a year. That spend­ing is to fund the pop­u­la­tion’s in­sa­tiable and grow­ing ap­petite for for­eign goods and ser­vices, even as earn­ings of for­eign ex­change, main­ly from the en­er­gy sec­tor, re­main volatile and lumpy. 

Faced with a 45.85 per cent de­ple­tion in for­eign re­serves from US$10.539 bil­lion in Sep­tem­ber 2015 to US$5.664 bil­lion in Sep­tem­ber 2024, the Min­is­ter of Fi­nance did not re­spond to the ques­tion of whether T&T’s for­eign ex­change regime is sus­tain­able.

He did, how­ev­er, tell re­porters gath­ered for his news con­fer­ence that the Gov­ern­ment has come up “with many dif­fer­ent and in­no­v­a­tive ways of re­plen­ish­ing those re­serves,” in­clud­ing bor­row­ing mon­ey from in­ter­na­tion­al banks and fi­nan­cial in­sti­tu­tions.

While we wel­come Mr Im­bert’s me­dia re­lease yes­ter­day and his dis­clo­sures at last week’s news con­fer­ence, some mis­con­cep­tions need to be cor­rect­ed.

For one, Mr Im­bert ac­cus­es this news­pa­per of “con­stant­ly push­ing its de­val­u­a­tion agen­da for the last nine years.” 

The truth is that the Guardian’s ed­i­to­r­i­al po­si­tion has been to avoid di­rect­ly ad­vo­cat­ing for ei­ther de­val­u­a­tion or flota­tion while press­ing for de­ci­sive ac­tion on this both­er­some is­sue.

As stat­ed in yes­ter­day’s ed­i­to­r­i­al: “De­mand for forex is greater than the sup­ply and the short­age re­quires a mar­ket ad­just­ment, ei­ther by in­creas­ing the sup­ply or by let­ting the float­ing rate mech­a­nism work.”

We al­so agree with re­cent com­men­taries on this is­sue by Dr Mar­lene Attzs and Dr Vaalmik­ki Ar­joon that the one sus­tain­able so­lu­tion to the gap be­tween the de­mand and sup­ply of for­eign ex­change is an im­me­di­ate and ur­gent fo­cus on the ex­pan­sion and de­vel­op­ment of for­eign ex­change-earn­ing sec­tors.

That, how­ev­er, is a long-term en­gage­ment that re­quires a whole-of-coun­try ap­proach, in­clud­ing busi­ness, labour and the op­po­si­tion par­ties.

In the mean­time, there is a clear and ur­gent need for a short-term so­lu­tion to the prob­lem of for­eign ex­change avail­abil­i­ty, which has been ex­ac­er­bat­ed by the re­cent de­ci­sion of two lo­cal com­mer­cial banks to se­vere­ly re­duce the for­eign ex­change lim­its on their cred­it cards. One of the banks cit­ed “the for­eign ex­change con­sid­er­a­tions pre­vail­ing with­in our coun­try,” to ex­plain its de­ci­sion.

It is al­so nec­es­sary to cor­rect Mr Im­bert’s com­ment that the IMF is rec­om­mend­ing that the T&T Gov­ern­ment float its ex­change rate.

The IMF’s po­si­tion is clear: “While such ex­change re­stric­tions are in­con­sis­tent with the Fund’s Ar­ti­cles, the Fund has fol­lowed a co­op­er­a­tive ap­proach, en­cour­ag­ing mem­bers to elim­i­nate these mea­sures, in­clud­ing through sur­veil­lance and tech­ni­cal as­sis­tance,” said the IMF in its state­ment to Guardian Me­dia on Fri­day.

En­cour­ag­ing a sov­er­eign gov­ern­ment to take an ac­tion, is quite dif­fer­ent to rec­om­mend­ing that ac­tion.