Akash Sama­roo

Se­nior Re­porter

akash.sama­roo@cnc3.co.tt

For­mer man­ag­ing di­rec­tor of ANSA Bank and gov­ern­ment min­is­ter Robert Le Hunte is not in agree­ment with the Prime Min­is­ter’s as­ser­tion that the de­mand for the Gov­ern­ment to de­val­ue the TT dol­lar is on­ly com­ing from peo­ple try­ing to make a quick prof­it.

On Mon­day, dur­ing Prime Min­is­ter’s Ques­tions, Dr Kei­th Row­ley re­buked the de­val­u­a­tion sug­ges­tion and said the pres­sure to do so was com­ing from spe­cial in­ter­est groups which have large sums of US in hand and stand to be­come wealth­i­er if the con­ver­sion rate for US dol­lars in­creas­es.

But Le Hunte, who is al­so a for­mer ex­ec­u­tive di­rec­tor of the Re­pub­lic Bank Group, said he re­spect­ful­ly did not share this view.

“There is a gen­uine short­age of for­eign ex­change in the mar­ket, which has raised anx­i­ety among the cit­i­zens across the board. There has there­fore been gen­uine con­cern and calls by some for de­val­u­a­tion, a man­aged float, or for mar­ket forces to pre­vail,” Le Hunte told Guardian Me­dia.

He added, “I be­lieve, how­ev­er, that if that were to oc­cur, it would curb de­mand for forex with­out nec­es­sar­i­ly re­sult­ing in a flood of peo­ple con­vert­ing their US dol­lars in­to TT. The re­al­i­ty is that there is a lack of con­fi­dence in the TT dol­lar, so even if the rate goes to ten to one, the mass con­ver­sion that the Prime Min­is­ter an­tic­i­pates will not oc­cur.”

How­ev­er, Le Hunte who served as a Cab­i­net min­is­ter un­der Dr Row­ley said if the Gov­ern­ment choos­es to main­tain the dol­lar at the ex­ist­ing rate, there are oth­er op­tions that can be looked at.

“There are oth­er levers with­in the eco­nom­ic en­vi­ron­ment, such as con­trol over our mon­ey sup­ply, the in­ter­est rate, tax­es, the lev­el of deficit spend­ing etc, that could be ad­just­ed, as sug­gest­ed by a num­ber of econ­o­mists,” Le Hunte ex­plained.

Mean­while, econ­o­mist Dr In­dera Sage­wan is ac­cus­ing the Min­is­ter of Fi­nance and Prime Min­is­ter of cre­at­ing a fa­cade to pur­port that the TT dol­lar is stronger than it ac­tu­al­ly is.

She said, like it or not, T&T was al­ready op­er­at­ing on a float­ing mar­ket rate for US dol­lars.

“I think the Min­is­ter (of Fi­nance) and Prime Min­is­ter can hold that po­si­tion large­ly be­cause while they con­tin­ue to main­tain an of­fi­cial ex­change rate, the re­al rea­son this econ­o­my is op­er­at­ing is be­cause of the black mar­ket rate, which hov­ers be­tween $7.50 and $8. That is the rate at which every­one is op­er­at­ing be­cause if you can­not get the mon­ey in the bank you have to go to the black mar­ket. So, the re­al­i­ty is the econ­o­my, giv­en the cur­rent sup­ply, is op­er­at­ing at the black­mar­ket rate,” Sage­wan posit­ed.

She said while she did not agree with de­val­u­a­tion, she would sup­port a man­aged float.

The econ­o­mist said the on­ly sus­tain­able so­lu­tion to the forex crunch is to in­crease its sup­ply, out­side of the en­er­gy sec­tor.

Mean­while co-or­di­na­tor of the Con­fed­er­a­tion of Busi­ness Cham­bers Jai Lelad­hars­ingh is hap­py the Prime Min­is­ter took a firm stance against de­val­u­a­tion. How­ev­er, he too be­lieves long-term so­lu­tions must be looked at.

“He has to come up with a com­pre­hen­sive plan for eco­nom­ic di­ver­si­fi­ca­tion and bring­ing stake­hold­ers to­geth­er to make sure it hap­pens. Stake­hold­ers in agri­cul­ture, stake­hold­ers in tourism, ser­vices, and small and medi­um en­ter­pris­es. He should al­so try to set up the Eteck parks where SMEs can in­vest in these fac­to­ries to get in­to fur­ther light man­u­fac­tur­ing to ex­port so we can earn US dol­lars. That is what is need­ed now as an emer­gency,” Lelad­hars­ingh ex­plained.

With re­spect to the Fi­nance Min­is­ter’s at­tempts to meet with com­mer­cial banks as the Gov­ern­ment looks at the pos­si­bil­i­ty of reg­u­lat­ing their dis­tri­b­u­tion of the forex pumped in­to the sys­tem, Lelad­hars­ingh said it was a much-need­ed ap­proach.