“Don’t just issue reminders, prosecute them” – economist advises

Non-cambio businesses trading in US dollars

…says this is the only “practical” way of addressing the issue

Amid concerns that Guyana could continue to lose foreign exchange earnings especially since local businesses are not abiding by Bank of Guyana (BoG) Act 1998 by trading US dollars, outspoken economist Ramon Gaskin is urging Government to implement the law.
Gaskin said that there would be no specific crackdown on businesses by issuing basic reminders in the media. He believes the only way the issue could be fixed is by ensuring that people are persecuted.
The BoG recently issued a statement expressing its concern that some businesses are accepting foreign currency for the purpose of settling payments for transactions, instead of Guyana dollars.
“That’s all they are doing. I don’t see it as a clampdown. A lot of people are violating the Act by trading in foreign currency; especially along Regent Street, you

can buy goods and pay in foreign dollars,” he said.
The statement said, “The Bank wishes to advise that pursuant to section (20) of the Bank of Guyana Act, 1998, all monetary obligations or transactions in Guyana shall be settled in Guyana dollars.”
The Bank reminded also that only banks and licensed cambios were authorised to conduct buying and selling of foreign currencies while noting that penalties were attached for violations which include fines and imprisonment.
“The Bank warns that any person contravening the Bank of Guyana Act 1998 and the Dealers in Foreign Currency (Licensing) Act 1989 will be prosecuted,” the notice added.
According to the BoG Act 1998, the Bank from time to time, by notice in writing, could demand from any person any financial information on foreign transactions. The BoG may require such persons to submit the information to the Bank, but if they fail to supply the information within the time specified or it is wilfully or recklessly withheld, they shall be guilty of an offence and shall be liable upon summary conviction to a fine of not more than $175,000 for each day the offence continues.
However, Gaskin said, “But what the central bank needs to do is prosecute people who are violating the law. Prosecute them! Not put a big statement in the newspaper, because they are not going to read it.”
The former presidential advisor told <<<Guyana Times>>> on Sunday that a lot of the funds that are received by the traders are kept in foreign currency and are not deposited in the banking system.
“They are probably taken outside of the country and exported. And that is part of the capital flight problem that we are also faced with in this country…all the monies the Cubans are paying,” he added.
This is also contributing to the reduction in the foreign reserves of the country.
He said that if this continued to happen, the country would have to keep borrowing. The Government, he said, will also continue borrowing in foreign currency to help meet the deficit and trade accounts.
“You have to pay for fuel in foreign currency. We have reduced earnings from the export of sugar, and, therefore, the Government will have to keep borrowing all the time to cover the deficit in the trade accounts, because we already have a big deficit on the current account, because we are spending more than we are taking in, and we have a deficit on the capital accounts,” he posited.
Gaskin continued, “So, we operating three deficits here: the current, capital and trade. And once you keep doing that, you will be borrowing all the time. Guyana is borrowing all the time. We have been doing that for the past 40 years uninterrupted, since 1992 when we inherited a US$2 billion debt and a lot of it written off…and we keep borrowing – again US$1.6 billion in debt, both domestic and external.”
With the recent influx of foreign shoppers into Guyana, Chinese businesses have been receiving enormous sales and have been engaged in trading US dollars. This is something that the BoG said it is aware of because it has had complaints in that regard. The BoG has also said this is lending to the issue and has cautioned these businesses to desist from it, as it plans to investigate thoroughly.
Only last year, the BoG also issued a notice to unauthorised money changers warning them that if they continue to ply their illicit trade and are caught, they would face the full extent of prosecution under the Dealers in Foreign Currency (Licensing) Act 1989. Their trade came into the spotlight again after shortages of foreign currency saw them hiking their rates last year. (Samuel Sukhnandan)