Flourishing black market for US dollars in Guyana

No spin can hide the truth

Veteran politician and former government minister Dr Leslie Ramsammy is of the strong view that “there is a flourishing black market for US dollars in Guyana right now”.

According to him, the black market for US dollars, which had essentially died in Guyana by 1990, “is seriously back today”.

Ramsammy, in a commentary, said “APNU+AFC is in a futile spin and denial mode, but truth cannot be simply dashed aside”.

Dr Leslie Ramsammy

The Bank of Guyana is desperately trying to provide APNU+AFC with some buffer by its own futile efforts to obfuscate and deny that there is any shortage of US dollars in Guyana, he posited.

“APNU+AFC can spin until it turns blue, it will not change what every Guyanese — including the leaders of APNU+AFC and the Bank of Guyana – know: That the black market for US dollars has returned to our country with a vengeance,” Ramsammy commented.

“Whether the shortage of US dollars in the official market is real or engineered, the fact is there is a real black market (wherein) people are purchasing US dollars (for) as high as Gy$230 to US$1. One airline operating in Guyana is charging people at a rate of Gy$250 for one US dollar. Some travel agencies are charging people at a rate of Gy$220 for a US dollar.

“At (commercial) banks and official Cambios, the rate for US$1, which was around Gy$206 at the end of 2016, is presently around Gy$218 — a definite decline of the Guyana dollar. The Guyanese business community and others who may need US dollars, such as people who travel outside of Guyana, are finding it difficult to procure US dollars from Banks and Cambios,” Ramsammy stated.

The Inter-American Development Bank (IDB), in its first quarterly Caribbean Report for 2017, confirmed that the Guyana dollar has suffered a significant decline against the US dollar in 2016, a decline that has so far accelerated in 2017. The Guyanese Business Community has formally complained about the erosion of the value of the Guyana dollar against the US dollar, and the decline in the availability of foreign currency. The banking community has confirmed it is unable to meet demands for US dollars. Media personnel have tested the market and can confirm three things: first, that it is difficult to purchase US dollars from Banks and Cambios; second, that when available, the rate is between $218 and $220; and third, there is a black market wherein one US dollar is purchased at a rate of above G$230, Ramsammy contended.

“Interestingly, even as APNU+AFC, mainly through its Finance Minister, insists there is no validly to the claim there is a shortage — (brought about by) a declining value and a flourishing black market for US dollars — the Bank of Guyana (has) sought to ban trading US dollars for Barbadian and Trinidadian dollars. This is clear evidence that APNU+AFC/Bank of Guyana know the US dollar is under serious stress in Guyana.

“Further evidence that APNU+AFC is aware of the real shortage of US dollars and the declining value of the Guyana dollar comes from the fact that APNU+AFC instituted new rules for the Banking Community, which established a Gy$3 spread between the buying and selling price for the US dollar,” Ramsammy explained.

He deemed this move a desperate and stupid bid to stem the decline in the Guyana dollar, and said it has predictably catalyzed the US dollar black market.

He said part of the problem is the dramatic decline in US dollar earnings by rice and sugar, traditional pillars and powerhouses in foreign currency earnings.

In spite of the increase in gold earnings, Ramsammy said, Guyana has lost up to US$40M in export earnings in 2015 and 2016, and might well incur bigger losses in 2017, mainly because rice and sugar have been decimated by the reckless policies of the coalition Government.

“Compounding the problem is a meagre foreign direct investment (FDI) profile. APNU+AFC had promised, and even boasted, that an APNU+AFC government would immediately propel FDI. After 22 months in office, FDI has dried up. Many local businesses have not invested, foreign businesses have curtailed their investments, and no significant new investment has come.

“The big splash in 2015 and in 2016 with expensive trade and investment teams in the US, Canada, the Caribbean and Europe have resulted in zilch investment,” he stated.

Meanwhile the Bank of Guyana’s external reserves have again fallen below $US600 million. At the end of 2015, it had fallen to US$598. At the end of 2016 it had not significantly improved with a reserve of about US$620M. At the end of the first quarter, the external reserves stand at $594M. Under the PPP Government, the reserve fluctuated in the last 10 years between US$700M and US$1billion. The PPP had largely maintained the reserve at about 6-to-8- months’ export earnings. Presently, it stands at about a three-month export base. According to Ramsammy, this is not coincidence; it is a telling statistic.

“No matter how hard the Finance Minister and the Governor of the Bank of Guyana spin the truth, APNU+AFC, like its parent, the PNC in the 1970s and 1980s, is presently presiding over an economy in which foreign currency availability is limited, the Guyana dollar has devalued, and there is a black market for US dollars and foreign currency. These truths are at the moment incontrovertible,” he concluded.