GMSA sounds wake-up call to Govt as Guyana dollar plummets
As concerns grow over the plummeting value of the Guyana dollar, the Guyana Manufacturing and Services Association (GMSA) is urging the relevant authorities to take immediate steps to stabilise the value of the local currency.
The GMSA is calling on Finance Minister Winston Jordan to urgently hold broad consultations on the matter and warned that failure to arrest the situation would result in devastating consequences.
At its recently-held Board meeting, GMSA members deliberated deeply on the woes of the manufacturing sector, including the deteriorating rate of the Guyana dollar and dire impacts it would have on business and employment, and ultimately the entire economy.
According to the Board in a public statement on Wednesday, it is estimated that the real exchange rate when available for the purchase of foreign exchange is $230 for the replacement of imported inputs into the sectors.
“We are concerned that our ability to keep prices stable will be limited and guided by this new rate. The burden of the changes in the VAT regime will also cause production costs to move upwards,” the business umbrella body noted.
As a result, the GMSA is encouraging all of the sectors to implement cost-cutting exercises and have noted that some entities have started to rationalise employment.
The body warned that the rise in the price of the US dollar would have far-reaching effects for Guyana as a whole, both socially and economically.
The GMSA said the Bank of Guyana as well as the Government should immediately inject funds into the system in order to stabilise the value of the local currency.
“We believe that the rate is being driven by the simple economic formula of supply and demand. This situation has the potential to further increase unemployment and at worst, wipe out companies,” the GMSA stated.
Consumers have been crying out about being forced to pay high rates for foreign currencies as a result of the commercial banks and cambios claiming to have a shortage.
Usually, when commercial banks experience a shortage, they turn to the Bank of Guyana to purchase the currency to meet the demand.
Jordan recently announced on a radio programme that the foreign exchange reserves at the Bank of Guyana were in excess of US$600 million, but commercial banks and cambios across the country continue to turn away customers, claiming a shortage of the US dollar. Based on the findings of this newspaper’s investigations, popular cambios are turning away regular patrons who are interested in purchasing foreign currencies. This has resulted in businesspersons and the average Guyanese being forced to buy foreign currencies at exploitative rates.
Around the city, money changers have already raised their rates for the US dollar to G$220.
But both Finance Minister Winston Jordan and Bank of Guyana Governor, Dr Gobind Ganga are maintaining that there is no shortage of foreign currencies in Guyana.
Jordan, on the radio programme, explained that the Central Bank has no record of shortages at commercial banks. “The Governor has assured me that he doesn’t know anything about that, because the banks haven’t approached him for foreign exchange,” Jordan stated.
The Finance Minister said he believed there was a deliberate attempt to starve the economy of foreign currencies.
Junior Finance Minister Jaipaul Sharma has also opined that commercial banks and cambios were hoarding foreign currencies in order to get better prices from preferred markets.
He told Guyana Times recently that “maybe they tell the customers ‘no’ so they could get a higher rate. Maybe they are keeping it for some friend or some special customer”.
Nonetheless, he does not believe the situation warrants a probe. According to the Junior Finance Minister, Government cannot control what the commercial banks and cambios tell their customers.