Nearly ten years ago, former Central Bank governor Jwala Rambaran sounded the alarm bell with respect to foreign exchange availability.
He did so in delivering the third Monetary Policy Forum address to the Chaguanas Chamber of Industry and Commerce on December 1, 2014.
At the time, Mr Rambaran described the availability of foreign exchange as “a murky matter” and referred to “everyone’s needs for precious US currency being unfulfilled, from the vacationer wanting US$500, to you, the business community, being unable to pay for goods, and seeing your credit standing being affected.”
Turning to those gathered at the media table, Rambaran also said he was sure that when business reporters wrote the 2014 Year In Review, “they will probably say the so-called ‘foreign exchange shortage’ is the business story of the year, and perhaps it is.”
Rambaran was clearly indicating that in that year, there had been a great deal of disquiet in the business community about access to foreign exchange to pay their bills.
There is significant irony in that speech to the Chaguanas Chamber because on December 4, 2015, almost exactly a year later, in a speech to the Downtown Owners and Merchants’ Association, Mr Rambaran identified by name the companies he said were among the largest users of foreign exchange in T&T, as well as the five sectors that were the largest users.
For revealing the names of companies that had access to the most foreign exchange, Mr Rambaran’s service as the country’s Central Bank governor was terminated three weeks later.
The irony is that ten years after his speech at the Hyatt, there are again people in this country who want the Central Bank, in the interest of public transparency, to provide information about who is getting the foreign exchange and on what basis.
While current Governor Dr Alvin Hilaire is unlikely to be as injudicious as his immediate predecessor, there is clearly need for both the Central Bank and the Ministry of Finance to bring immediate clarity to the issues of the foreign exchange regime, access and sustainability.
In a sense, the foreign exchange problems T&T is facing are like climate change—it is simple-minded in the extreme to think that if nothing is done, somehow the problem will resolve itself.
Like climate change, T&T’s foreign exchange problems require clear analysis of both the causes and consequences of the problem; there needs to be a thoughtful cost/benefit analysis of the various options, to be preceded by widespread but discrete consultation, and followed by decisive action and constant communication.
For more than ten years, the T&T population’s demand for foreign exchange has far exceeded supply, mostly from the energy sector with the authorised dealers as intermediaries, at the current exchange rate.
There is an arrangement for the deficit between the demand and supply of foreign exchange to be addressed by the Central Bank, which sells about US$1.2 billion to the authorised dealers on an annual basis. That sum comes from the Government’s collection of taxes from the domestic energy sector. Spending US$1.2 billion to support the foreign exchange demands of the T&T population is not sustainable.
Therefore, it behoves Minister of Finance Colm Imbert and Governor Hilaire to act now to bring an end to this constant and continuing worry about foreign exchange availability.