Challenges facing local companies to access foreign exchange discussed with BoG

…as PSC engages Governor

The Private Sector Commission (PSC) in association with the Guyana Association of Bankers Incorporated on Monday met with and had discussions with Governor of the Bank of Guyana, Dr Gobind Ganga with regard to ongoing challenges faced by local companies in accessing foreign exchange.
Stakeholders, a PSC release stated, have agreed that despite there being a shortage of foreign exchange at some banks, there is no overall shortage of foreign exchange in Guyana given that the aggregate supply of foreign exchange is meeting the aggregate demand and therefore the market remains in equilibrium.
According to the PSC, the Governor of the bank confirmed that while there is an intra-bank market which enables banks to share, the Central Bank must rely on moral persuasion in an effort to achieve a more efficient distribution of foreign currency availability. He also emphasised the fact that it is the responsibility of the Central Bank to ensure that the Government meets its macro-economic objectives.
The PSC, the Bankers’ Association and the Bank of Guyana have all agreed to address the issues raised and promised to collaborate and work together for the benefit of all concerned, the release stated.

Disagreement
The local private sector and the Central Bank got into a public spat on Thursday last over the availability of foreign currency, US dollars in particular, in Guyana.
Over the past few weeks, there have been conflicting reports from both sides on this issue.
Several companies and businessmen have been complaining about a shortage of US dollars in Guyana.
Among those who have been vocal about the issue is President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker.
On Thursday last, the GCCI expressed its dissatisfaction with the BoG’s “lack of action, vision and modern financial policies to improve access to financing for local businesses”.
It said that the Central Bank has failed to intervene in the ongoing foreign currency shortage issue, despite the private sector complaining of a lack of US dollars since 2019. The GCCI also called for an independent investigation into the root cause of the shortage, indicating its loss of confidence in the BoG.
However, in response to the Chamber, the Central Bank Governor on Thursday last reminded of its core mandate, noting that “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 Central Bank is contending that there is no shortage and that there is enough currency at the various banking institutions – something which the Vice President reiterated. He noted that there needs be a system in place as well to promote the exchange of foreign currency among the commercial banks.
On Friday last, Tucker responded to the BoG, dismissing the Central Bank’s justification on the matter, arguing that “when the private sector businesses can’t pay or have to pay more for money to buy for imports, who will suffer??”
In a social media post, Tucker further posited that “the mere fact that agents for shipping companies have to open USD accounts at local banks, force local businesses to pay their freight in USD in country, shows there’s a major problem, several things will happen… prices will go up, USD shortage will get worst, it will become more difficult to do business in Guyana.”

System to monitor
Weighing in on the issue, Vice President Bharrat Jagdeo on Friday said that Guyana Government is going to consider the implementation of a daily reporting system to monitor the flow of foreign currency.
“We’ve been exploring something. I was thinking about this and we have to discuss it with the Finance Minister, that maybe we need a daily balance reported to the Central Bank of currencies purchased and sold, and the daily balance at all the institutions, and then the list of demands. And you will see in most cases, that they are clear [of any shortages], but it’s just that [the US dollars] exist in different institutions,” the Vice President explained during a press conference.
According to the Vice President, the foreign currency market in Guyana always has seasonal variations such as around the Christmas holidays when visitors come in and there is more foreign currency circulating. Likewise, he pointed out, there are low periods and it is during this time that more foreign currency will have to be supplied to the market.
Only recently, Attorney General and Legal Affairs Minister Anil Nandlall, SC, stated that companies or individuals cannot force anyone to pay for transactions done in Guyana in foreign currency unless special permission is granted by the Finance Ministry for them to trade using solely foreign currency.