Soyi­ni Grey

Se­nior Re­port/Pro­duc­er

soyi­ni.grey@guardian.co.tt

Cit­i­zens and busi­ness­es in T&T con­tin­ue to face more chal­lenges for for­eign ex­change as RBC be­came the lat­est com­mer­cial bank to cut its cred­it card spend­ing lim­it.

From De­cem­ber 1, RBC cred­it card hold­ers will see their month­ly lim­it re­duced from $41,000 to $14,000 in forex equiv­a­lent. This rep­re­sents a re­duc­tion from US$6,000 to US$2,000. This rep­re­sents a 66 per cent de­crease.

Fol­low­ing the an­nounce­ment yes­ter­day, sev­er­al cham­bers of com­merce re­spond­ed by crit­i­cis­ing the Gov­ern­ment for what they said was its poor man­age­ment of the dis­tri­b­u­tion of forex.

The move by RBC al­so comes af­ter the an­nounce­ment by Fi­nance Min­is­ter Colm Im­bert on Tues­day of plans to en­gage stake­hold­ers in an at­tempt to re­solve the forex is­sue fac­ing the coun­try. The cham­ber heads were up­set but not sur­prised, es­pe­cial­ly as this fol­lows a sim­i­lar ac­tion by Sco­tia­bank that an­nounced a sig­nif­i­cant re­duc­tion on the forex spend on their range of cred­it cards on Oc­to­ber 31.

Scotibank stat­ed that ef­fec­tive De­cem­ber 1, hold­ers of the Aero Mas­ter­card Black would on­ly be able to spend a max­i­mum of US$5,000 a month. Per­son­al cards have a US$2,000 lim­it. Re­pub­lic Bank has made sim­i­lar changes to their forex lim­its since Sep­tem­ber. Their cus­tomers could ac­cess a max­i­mum of US$5,000 per state­ment cy­cle. RBC has now fol­lowed suit.

In Sep­tem­ber 2023, Re­pub­lic Bank re­duced its cred­it lim­it to US$5,000.

Econ­o­mist Dr Vaalmik­ki Ar­joon said lo­cal bank cus­tomers should ex­pect fur­ther re­duc­tions in the fu­ture, es­pe­cial­ly if the de­mand for forex con­tin­ues to out­strip sup­ply. He warned these low­ered spend­ing lim­its could re­sult in high­er op­er­at­ing costs for small and medi­um busi­ness­es in par­tic­u­lar and that those costs are like­ly to be passed on to cus­tomers, es­pe­cial­ly those that pa­tro­n­ise busi­ness­es that are im­port-heavy.

“So don’t be sur­prised if we see high­er prices in shop­ping malls and flea mar­kets for Christ­mas,” Dr Ar­joon said. He said many re­tail­ers who were plan­ning to use their cred­it cards to pur­chase goods for the Christ­mas sea­son may now turn to the black mar­ket to get the US the banks can no longer give them. “Black mar­ket rates are much high­er than the of­fi­cial rate,” Dr Ar­joon said. “Now that they have to source more from the black mar­ket, the greater their cost of get­ting forex, the greater the cost of busi­ness, which will be passed on­to the con­sumers as high­er prices.”

The econ­o­mist al­so warned of con­se­quences that go be­yond high­er-than-nor­mal prices. Mi­cro, Small and Medi­um En­ter­pris­es (MSMEs) could al­so see their op­er­at­ing costs in­crease as a re­sult of the hin­dered ac­cess to forex. High­er im­port costs mean re­duced prof­its for MSMEs, lim­it­ing their abil­i­ty to pay tax­es and, in worse-case sce­nar­ios, their staff.

Dr Ar­joon ex­plained, “Some MSMEs may al­so cut staff to redi­rect funds to af­ford to pay the black mar­ket rate. Once MSMEs down­size or even close due to less forex al­lo­ca­tion, it ul­ti­mate­ly leaves larg­er com­pa­nies, who may have a health­i­er sup­ply of forex dom­i­nat­ing the mar­ket, able to charge high­er prices as they choose, as there is less com­pe­ti­tion.”

The Trinidad and To­ba­go Cham­ber of Com­merce is ac­knowl­edg­ing that forex avail­abil­i­ty is frag­ile and is ex­ac­er­bat­ed by the fact that it is Christ­mas. In a state­ment, it said, “This sit­u­a­tion un­der­scores the ur­gent need for so­lu­tions that go be­yond tem­po­rary mea­sures. It is clear there is no sin­gle so­lu­tion; rather, we need a com­bi­na­tion of short, medi­um, and long-term strate­gies.”

The cham­ber then re­peat­ed its call for col­lab­o­ra­tive round­table dis­cus­sions to find a prac­ti­cal so­lu­tion to the prob­lem. It is al­so again ask­ing that the Cen­tral Bank, the Min­istry of Fi­nance, the Bankers As­so­ci­a­tion of Trinidad and To­ba­go (BATT), and the heads of busi­ness sup­port or­gan­i­sa­tions (BSOs) be in­vit­ed to those dis­cus­sions as pro­posed by the Min­is­ter of Fi­nance.

Pres­i­dent of the San­gre Grande Cham­ber Ri­car­do Mo­hammed said RBC’s ac­tions proved that “the Gov­ern­ment of Trinidad and To­ba­go has sig­nif­i­cant­ly mis­man­aged our forex.” Mo­hammed said since the clo­sure of the Petrotrin re­fin­ery, a ma­jor forex earn­er, the Gov­ern­ment has not en­gaged in any ac­tion, in­clud­ing eco­nom­ic di­ver­si­fi­ca­tion, that could fill the forex gap.

“The time for old talk needs to stop,” he said. “This Gov­ern­ment needs to put sig­nif­i­cant plans in place to en­sure that this coun­try earns our for­eign ex­change earn­ings at a stan­dard where­by we do not have these short­ages.” Mo­hammed point­ed out that as an “oil-rich na­tion in the Caribbean, this should have nev­er had to be a sit­u­a­tion for us to deal with.”

His words echo that of the co­or­di­na­tor of the Con­fed­er­a­tion of Re­gion­al Busi­ness Cham­bers Jai Lelad­hars­ingh who al­so heav­i­ly crit­i­cised the lack of di­ver­si­fi­ca­tion. “Man­u­fac­tur­ing alone can­not cut it!” he said. “You have to de­vel­op oth­er sec­tors such as agri­cul­ture and tourism, and agri­cul­ture con­tin­ues to be in a state of de­cline over the years.”

How­ev­er, he ac­knowl­edged that tourism would be lim­it­ed in its growth by the high crime rate. Al­so call­ing on the Gov­ern­ment to put re­al in­vest­ment in tourism and agri­cul­ture is Ang­ie Jairam, the pres­i­dent of the Fyz­abad Cham­ber of Com­merce. The growth of both sec­tors, she said, was ham­pered by the threat of crime and in­suf­fi­cient in­vest­ment by the Gov­ern­ment. She de­scribed these two sec­tors as “low-hang­ing fruit.”

The To­ba­go Busi­ness Cham­ber con­tin­ued its call for the re­peal of the For­eign In­vest­ment Act. Pres­i­dent and at­tor­ney Mar­tin George called the law that gov­erns how for­eign­ers or or­gan­i­sa­tions can in­vest in land, pri­vate and pub­lic com­pa­nies, and sets strict guide­lines for how com­pa­nies backed by for­eign in­vestors can be legal­ly es­tab­lished. George be­lieves the law blocks for­eign in­vest­ment in To­ba­go by mak­ing it over­ly bu­reau­crat­ic and oner­ous so as to not make it a vi­able op­tion. Es­pe­cial­ly when it can be done eas­i­ly else­where in the re­gion. He de­scribed it as ab­surd, as “oth­er Caribbean is­lands are rolling out the red car­pet for (for­eign-based) in­vestors.” 

Yes­ter­day Guardian Me­dia reached out to RBC, but the bank did not re­spond up to late yes­ter­day.

The Bankers As­so­ci­a­tion of T&T said yes­ter­day they do not re­spond to de­ci­sions tak­en by in­di­vid­ual mem­bers.