BoG, Private Sector clash over availability of US dollars in Guyana

– GCCI says BoG failed to intervene in shortage of foreign currency issue
– Central Bank operates in keeping with international norms, standards – BoG

The local private sector and the Bank of Guyana (BoG) have gotten into a public spat over the availability of foreign currency, United States dollars in particular.
Over the past few weeks, there have been conflicting reports from both sides on this issue after several companies and businessmen have complained about a shortage of US dollars in Guyana.
Among those who have been vocal on the issue was President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker.
In a statement on Thursday, the GCCI expressed its dissatisfaction with the Bank of Guyana’s treatment of the “Foreign Currency Shortage” in Guyana.
“…the Georgetown Chamber of Commerce and Industry (GCCI) is dissatisfied with the Bank of Guyana’s (BOG) lack of action, vision and modern financial policies to improve access to financing for local businesses,” it contended.
According to the GCCI, Guyana’s economy is one of the fastest-growing in the world, with oil revenues generating hundreds of millions of US dollars annually.
The Chamber pointed out that, “According to its own statistics, the Bank of Guyana has failed to intervene in the ongoing foreign currency shortage issue, despite the Private Sector complaining of a lack of US dollars since 2019. Therefore, the Chamber views the Central Bank’s inaction to activate mitigating strategies to address the foreign currency situation as a disregard for business.”
Nevertheless, the GCCI contended that it will continue to advocate this cause in hopes that a thorough, independent investigation is conducted in order to uncover the root cause.
“An independent intervention is needed since the GCCI has lost confidence in the leadership of the Bank of Guyana or its capacity to implement policies that will guide Guyana’s financial sector to support growth being experienced in the real sector,” the Chamber posited.
However, even as the GCCI is claiming a shortage of foreign currency, this has been dismissed by the Governor of the Bank of Guyana, Dr. Gobind Ganga, who previously contended that there is enough money in the local market.
In a statement issued in response to the Chamber on Thursday, BoG stated that it is an independent central bank with a clear mandate defined by law and in keeping with international norms and standards for central banking. Its objectives include fostering domestic price stability through the promotion of stable credit and exchange conditions.
Further, it noted that the law establishing the BoG also stipulates that the Guyana Dollar is a freely floating currency, traded in a market whose prices are determined by prevailing market conditions, that is to say, demand and supply.
“The GCCI appears to be of the mistaken impression that the BoG exists to ensure that foreign currency is available to their membership at the times that they demand and at prices that they demand. This is simply not how an open market economy operates, and is simply not how foreign currency availability and pricing are determined where floating currencies are concerned,” the missive detailed.
In a previous statement last month, the BOG had disclosed that the local banking system, with an average monthly turnover in excess of USD500 million, has an adequate supply of US dollars to meet demand.
In fact, it was noted that as of February 22, 2023, the banking system had USD 99.5 million available for transactions. While the available funds are not evenly distributed among the banks, the BoG has noted that there is enough to cover the cash flow needs of transactions arising from businesses in Guyana.
Moreover, Dr Ganga had previously indicated that some banks could be “hoarding” their foreign currency which could be the cause for the apparent “shortage”.
As a result, key private sector players have since indicated that they wrote the Guyana Association of Bankers Inc (GABI) to discuss this matter.
In its Thursday missive, the BoG contended that “The GCCI’s energies would be better spent engaging either the banks or the bankers’ association, who are also members of the private sector, with a view to better understanding the factors that influence the availability and pricing of foreign currency in the domestic market. The BoG remains committed to discharging its mandate and to engaging with the private sector on matters of concern to them in a mutually respectful manner.”
Nevertheless, Guyana Times understands that the meeting between GABI and the private sector is set for sometime next week.