PE­TER CHRISTO­PHER

Se­nior Mul­ti­me­dia Re­porter

pe­ter.christo­pher@guardian.co.tt

Fri­day’s an­nounce­ment by RBC that there will be a re­duc­tion in its for­eign cur­ren­cy spend­ing lim­it for cred­it cards is mere­ly a re­flec­tion of the on­go­ing forex cri­sis in the coun­try.

Econ­o­mist Dr. In­dera Sage­wan said this an­nounce­ment is yet an­oth­er blow to Small and Medi­um-sized En­ter­pris­es (SMEs) sec­tor, who are al­ready find­ing dif­fi­cul­ty in ac­cess­ing for­eign cur­ren­cy to pur­chase goods.

“For many of them, it the on­ly way they can do in­ter­na­tion­al trans­ac­tions be­cause they too can’t go to the bank and have easy ac­cess to for­eign ex­change. So by and large, it is the on­ly mech­a­nism that is avail­able to them. To fur­ther re­strict that means that the abil­i­ty to run your busi­ness­es will now be fur­ther con­strained,” Dr. Sage­wan in a phone in­ter­view yes­ter­day.

In a no­tice on Fri­day, RBC said ef­fec­tive Sep­tem­ber 1, 2024, for­eign ex­change lim­its on RBC cred­it cards for both per­son­al bank­ing and busi­ness bank­ing clients will be re­duced from TT$51,000 (ap­prox­i­mate­ly US$7,500) to $41,000 (ap­prox­i­mate­ly US$6,000).

This an­nounce­ment came just un­der a year af­ter Re­pub­lic Bank slashed the US spend­ing lim­it on its cred­it cards in half from US$10,000 to US $5,000 from Sep­tem­ber, 21, 2023.

Sage­wan said it was sim­ply a con­tin­u­a­tion of the on­go­ing pat­tern be­ing fol­lowed by com­mer­cial banks in the wake of re­duced for­eign ex­change earn­ings across the econ­o­my.

“It re­flects re­al­ly a wors­en­ing of the eco­nom­ic sit­u­a­tion in Trinidad and To­ba­go, bot­tom line. And that noth­ing is be­ing done in or­der to bring in new sources of for­eign ex­change. It re­flects the con­tin­ued de­cline in the en­er­gy sec­tor, which is our ma­jor source of for­eign ex­change. This is very telling on the econ­o­my, “ said the econ­o­mist.

She said the bank’s de­ci­sion was not sur­pris­ing based on that re­al­i­ty.

“This de­ci­sion does not sur­prise me be­cause it re­al­ly sim­ply sup­ports the for­eign ex­change cri­sis that the coun­try has. And the lim­it­ed means that are avail­able whether it is the cen­tral bank or in this case, the com­mer­cial bank, that re­strict the use of for­eign ex­change,” said Dr Sage­wan.

She con­tin­ued, “It re­flects the short­age in the coun­try. It re­flects the fact that the main sources of for­eign ex­change in the coun­try are not bring­ing in that lev­el of for­eign ex­change. It al­so re­flects the con­straints that the cen­tral bank will have, as di­rect­ed by the gov­ern­ment, to con­tin­ue to put for­eign ex­change on­to the mar­ket.”

On Fri­day, the Cen­tral Bank al­so is­sued a no­tice stat­ing it would be drop­ping the re­serve re­quire­ment for com­mer­cial banks from 14 per cent to 10 per cent as a re­sult of the re­cent de­cline in ex­cess re­serves of com­mer­cial banks.