The Min­istry of Fi­nance main­tains there is no need to de­sist from the cur­rent pol­i­cy of main­tain­ing the TT Dol­lar at a fixed rate, and al­so as­serts that there will be a re­vi­sion to the es­sen­tial im­ports fa­cil­i­ty that cur­rent­ly ex­ists at the Ex­im­Bank.

The Min­istry is­sued an of­fi­cial state­ment on these and oth­er for­eign ex­change is­sues ti­tled “Forex Mat­ters” to­day, seek­ing to clar­i­fy what it de­scribes as er­ro­neous re­port­ing in the lo­cal me­dia.

Ac­cord­ing to the Min­istry, the IMF’s call for a less re­stric­tive for­eign ex­change regime is noth­ing new and has been made on sev­er­al oc­ca­sions be­gin­ning as far back as 2012.

“As far back as 2012, the IMF rec­om­mend­ed ‘greater ex­change rate flex­i­bil­i­ty to al­low pric­ing to play a big­ger role in equi­li­brat­ing the mar­ket’. This was re­peat­ed in the IMF’s 2013 Ar­ti­cle IV Re­port on Trinidad and To­ba­go, where the IMF re­it­er­at­ed its view that ‘our ex­change rate should be al­lowed to fluc­tu­ate with­in a wider band’,” the state­ment from the Fi­nance Min­istry ob­served.

The Min­istry al­so points out that the es­sen­tial im­ports fa­cil­i­ty is one area that needs an­oth­er look.

“The es­sen­tial im­ports fa­cil­i­ty has worked well for the last 4 years but it need­ed re­struc­tur­ing be­cause there is no longer any need for pref­er­en­tial ac­cess to forex for the im­por­ta­tion of items such as face masks, res­pi­ra­tors and hand san­i­tiz­ers,” the state­ment ex­plained.

The fol­low­ing is the full text of the state­ment from the Min­istry…

The Min­is­ter of Fi­nance, Hon Colm Im­bert, MP, has tak­en note of com­men­tary in the main­stream me­dia over the last two weeks re­gard­ing (1) the avail­abil­i­ty of for­eign ex­change, (2) the pol­i­cy for dis­tri­b­u­tion of for­eign ex­change, and (3) the ex­change rate of the TT Dol­lar to the US Dol­lar and the ques­tion of float­ing or de­valu­ing the dol­lar.

This me­dia com­men­tary and me­dia rec­om­men­da­tions/de­mands can be sum­marised as fol­lows:

(a) To ad­dress dif­fi­cul­ties be­ing ex­pe­ri­enced by com­pa­nies and in­di­vid­u­als in gain­ing ac­cess to for­eign ex­change, the Gov­ern­ment should al­low the TT Dol­lar to float (i.e. de­val­ue), be­cause the IMF says so

(b) To ad­dress a per­cep­tion of un­fair dis­tri­b­u­tion of forex, the Gov­ern­ment should get di­rect­ly in­volved in the dis­tri­b­u­tion of for­eign ex­change and not leave it up to the Com­mer­cial Banks or the Cen­tral Bank

(c) The Gov­ern­ment gave in to pres­sure from busi­ness­men and the Ex­press news­pa­per to re­sume the forex win­dow at the Ex­im­Bank for es­sen­tial im­ports

How­ev­er, the re­al­i­ty is that the IMF’s rec­om­men­da­tion that the TT Gov­ern­ment should al­low the TT dol­lar to float, which would re­sult in an im­me­di­ate de­val­u­a­tion of the TT Dol­lar, is not new. This rec­om­men­da­tion did not ap­pear for the first time in the 2024 IMF Ar­ti­cle IV Re­port, as the Guardian news­pa­per would have us be­lieve.

As far back as 2012, the IMF rec­om­mend­ed “greater ex­change rate flex­i­bil­i­ty to al­low pric­ing to play a big­ger role in equi­li­brat­ing the mar­ket”. This was re­peat­ed in the IMF’s 2013 Ar­ti­cle IV Re­port on Trinidad and To­ba­go, where the IMF re­it­er­at­ed its view that “our ex­change rate should be al­lowed to fluc­tu­ate with­in a wider band”. How­ev­er, the then UNC Gov­ern­ment told the IMF that they were not con­tem­plat­ing changes to the ex­change rate sys­tem at that time.

Again in 2014, the IMF told the then UNC Gov­ern­ment that the for­eign ex­change al­lo­ca­tion sys­tem ex­ist­ing at that time “had led to an ap­par­ent­ly wide­spread and per­sis­tent re­cur­rence of for­eign ex­change short­ages”. How­ev­er, the then UNC Gov­ern­ment did not agree to the IMF’s rec­om­men­da­tion that our dol­lar be al­lowed to float.

The present PNM Gov­ern­ment has con­sis­tent­ly stat­ed since 2015 that it main­tains our fixed ex­change rate to con­trol in­fla­tion, which is now al­most the low­est in the world, and it will not im­pose hard­ship on the poor and vul­ner­a­ble by giv­ing in­to the ir­ra­tional de­mands of the Guardian news­pa­per and oth­er provo­ca­teurs that we de­val­ue the dol­lar. All a de­val­u­a­tion will do is cause a mas­sive spike in the cost of liv­ing and make every­thing more ex­pen­sive. It will not cre­ate any ad­di­tion­al US dol­lars for the coun­try or make forex more read­i­ly avail­able for or­di­nary cit­i­zens. By pre­tend­ing that we are sub­ject to the dic­tates of the IMF, there­fore, and con­stant­ly push­ing its de­val­u­a­tion agen­da for the last 9 years, the Guardian is do­ing the pop­u­la­tion a dis­ser­vice.

In this con­text, it is note­wor­thy that Bar­ba­dos, which has been in an IMF pro­gramme for many years, and at one time with­in the last 10 years al­most ran out of for­eign re­serves, has res­olute­ly re­fused for the last 49 years to float or de­val­ue its dol­lar. The fact is that the Bar­ba­dos dol­lar has been pegged to the US dol­lar at a rate of BBD 2.00 to USD 1.00 since 1975. Fur­ther, there are ex­change con­trol re­stric­tions in Bar­ba­dos that do not ex­ist in Trinidad. In­stead of wast­ing time de­mand­ing that the Trinidad Gov­ern­ment de­val­ue the dol­lar, there­fore, the Guardian would be bet­ter off try­ing to fig­ure out how Bar­ba­dos has man­aged to keep its dol­lar fixed for so long and how it has man­aged to re­strict cap­i­tal flows, de­spite be­ing in an IMF Pro­gramme.

Re­gard­ing the de­mand by the me­dia and cer­tain stake­hold­ers in the busi­ness com­mu­ni­ty that the Gov­ern­ment get more in­volved in the dis­tri­b­u­tion of for­eign ex­change, it has al­ready been an­nounced that the Min­is­ter of Fi­nance will be hold­ing con­sul­ta­tions over the next month with var­i­ous in­ter­est groups to de­ter­mine the best way for­ward. Again, this is not new, and it was based on rep­re­sen­ta­tion made by the busi­ness com­mu­ni­ty that the Gov­ern­ment make forex avail­able in a tar­get­ed man­ner, that the forex win­dows at the Ex­im­Bank, which from all ac­counts are work­ing well, were cre­at­ed FOUR YEARS AGO.

Re­gard­ing the al­leged pres­sure brought to bear on the Gov­ern­ment by busi­ness­men and the Ex­press news­pa­per, which al­leged­ly forced the Gov­ern­ment to re­sume the forex win­dow for es­sen­tial im­ports at the Ex­im­Bank, which THIS Gov­ern­ment in­tro­duced dur­ing the Covid-19 pan­dem­ic, that nar­ra­tive is a fig­ment of the me­dia’s imag­i­na­tion. The truth is that the Gov­ern­ment sig­nalled months ago to clients of the Ex­im­Bank that it was re­view­ing the list of es­sen­tial im­ports and the quan­tum of for­eign ex­change made avail­able through that par­tic­u­lar forex win­dow, which was cre­at­ed by the Min­istry of Fi­nance in 2020.

It is note­wor­thy that the forex win­dows cre­at­ed at the Ex­im­Bank, name­ly the win­dow for ex­port man­u­fac­tur­ers and the win­dow for es­sen­tial im­ports are in­no­va­tions of THIS Gov­ern­ment, to en­sure bet­ter fo­cus, eq­ui­ty and ra­tio­nal­i­ty in the dis­tri­b­u­tion of the Gov­ern­ment’s for­eign ex­change. These are not cre­ations of the me­dia or the busi­ness com­mu­ni­ty or any pre­vi­ous Gov­ern­ment. In­stead, these are pol­i­cy in­stru­ments of THIS Gov­ern­ment and THIS Min­istry of Fi­nance de­signed to fa­cil­i­tate di­ver­si­fi­ca­tion the econ­o­my and to en­sure that forex is avail­able for es­sen­tial items.

The es­sen­tial im­ports fa­cil­i­ty has worked well for the last 4 years but it need­ed re­struc­tur­ing be­cause there is no longer any need for pref­er­en­tial ac­cess to forex for the im­por­ta­tion of items such as face masks, res­pi­ra­tors and hand san­i­tiz­ers.

It is pure fan­ta­sy for the me­dia, there­fore, to pro­mote its false nar­ra­tive that the win­dow for es­sen­tial im­ports, cre­at­ed by THIS Gov­ern­ment 4 years ago as a long-term so­lu­tion for eq­ui­table and prac­ti­cal ac­cess to for­eign ex­change for items that the coun­try needs, such as ba­sic foods and phar­ma­ceu­ti­cals, was re­sumed mere­ly be­cause of me­dia pres­sure and the noise made by cer­tain busi­ness­men, who, by their own ad­mis­sion, do not par­tic­i­pate in the Ex­im­Bank fa­cil­i­ty.