Price hikes will be passed on to businesses, customers – MP

Changes to exchange rates by GRA

The Guyana Revenue Authority (GRA) has issued a notice announcing the a further dip of the Guyana currency versus the United States (US) dollar; which will see increases being borne by businesses when paying customs duties.
According to a notice taking effect from May 1, GY$208.05 is to be exchanged for US$1. In the case of the British currency, GY$287.19 is to be exchanged for £1. The changes have not gone unnoticed.
Concerns have already been expressed by some that this change will have an adverse impact on business. According to former Minister within the Finance Ministry and Opposition Member of Parliament (MP) Juan Edghill, the increase will likely be passed down to consumers.
“If the GRA put out an exchange rate that is higher than before, it means that when they’re calculating the value of an item, for instance if they’re calculating the duties and the taxes at the new rate, you will end up paying more,” he explained, during an interview on Tuesday.
“If you pay more, the business person will have to pass that cost on to the consumer. So, the consumer would end up paying more. And that is the exchange rate that would be used for the currency in the acquisition of fuel, all other commodities. That will be official in all matters of taxation.” According to Edghill, it was therefore important for the GRA to issue its notice, as this will be its new modus operandi. The former Minister within the Finance Ministry noted that this latest development is an indication of what is taking place on the market. “That rate is fixed and driven by what is taking place; the demand, as well as the availability. The dollar has to be backed by some commodity, in our case its gold. The movement of the rate is determined by what is taking place in the market. And once that rate goes up, prices will go up.”

Foreign currency
Following last year’s reported crisis regarding the availability of foreign currency in the local market, the Bank of Guyana (BoG) Governor, Dr Gobind Ganga had stated last month that the bank now has over US$75 million in foreign currency.
“Currently, we have almost US$75 million of excess supply of foreign currency in the market with commercial banks, and we are hoping that this excess supply will drag the rates down further than where it is. So, it is not in shortage; there is excess supply of 75 million or more US dollars in the market,” Dr Ganga had asserted. While both the Central Bank and the Government had maintained that there was no foreign currency crisis, several commercial banks and cambio dealers had insisted otherwise, jacking up the exchange rate for US dollars.
In fact, business owners had also complained about the apparent foreign currency shortage, saying that they were unable to readily make overseas payments by draft or wire transfer for products and services from overseas. Even citizens had borne the backlash of the crisis by paying high exchange rates.
Government, through the Central Bank, issued a circular to cambios and the local banking sector informing them of the regulated rates for foreign currency trade. According to the circular seen by Guyana Times, non-bank cambios must reduce the spread between the buying and selling rates on foreign currency transactions to no more than GY$3. During his 2018 Budget presentation back in November, Finance Minister Winston Jordan had said that the Bank of Guyana’s exchange rate for the Guyana Dollar to the US Dollar is expected to remain stable at $206.5 throughout this year, while adding that the US Dollar had appreciated by 1.6 per cent against the Guyanese dollar.