Updated: No foreign exchange shortage, although sister Caricom buyers are taking out US dollars

Last Updated on Tuesday, 6 December 2016, 18:30 by Denis Chabrol

Finance Minister, Winston Jordan and Governor of the Bank of Guyana, Dr. Gobind Ganga speaking on the balcony of Parliament Building.

Finance Minister, Winston Jordan and Governor of the Bank of Guyana, Dr. Gobind Ganga speaking on the balcony of Parliament Building.

Guyana on Tuesday rubbished claims that there is a massive foreign exchange shortage, but he said that buyers from sister CARICOM countries having been taking out United States (US) dollars from this country.

“The issue as it relates to the Trinidad and Barbados currencies flooding our market will be looked at and action will be taken to ensure that this occurs in a normal way rather than it being here just to buy up foreign currency,” Finance Minister, Winston Jordan was quoted as saying in a government statement issued late Tuesday.

“There is no shortage,” he said when asked by Demerara Waves Online News earlier in the day.. “The net asset holding of commercial banks has gone up as of September or October and so that means that our foreign exchange would have been higher than last year so how can there be a shortage,” he added.

Ganga said the Bank of Guyana has about US$625 million in reserves equivalent to about four months of imports.

Although the US dollar is trading at about GYD$208 (selling) / GYD$213 (buying), Ganga maintained there is sufficient US currency in the foreign exchange market.

The Bank of Guyana Governor said from time to time the Central Bank has been putting in US dollars on the foreign exchange market to ensure there are smooth transactions.

Due largely to a fall in oil prices in neighbouring Trinidad and Tobago, and Suriname; those countries have been suffering from serious foreign exchange shortages. Guyana’s foreign exchange market has been largely dependent on the export of gold, bauxite and sugar despite very poor performance of Guyana Sugar Corporation.

“There is no shortage of foreign exchange in Guyana, the reserves at the Bank of Guyana have improved from approximately US$598 at the end of 2015 to about US$625M at present, an increase of US$28M,” Minister Jordan added in the government statement.
He further stated that “when you consider the holdings by commercial banks, foreign reserves have also increased in the system from approximately US$955M at the end of 2015 to US$1.042B at present. Therefore, there is no shortage of foreign exchange, consequently, there is no foreign exchange crisis looming, and no need for the currency to depreciate. The Bank of Guyana will take all necessary actions to protect the currency and to protect the reserves at the Bank of Guyana,” Minister Jordan said.
Dr. Ganga concurred with Minister Jordan that there was no reason for concern.
“There is no foreign currency crisis looming in Guyana. It’s a misleading article, the headline is even more misleading. The fact is we have a net supply of foreign currency in the system, so there should be no depreciation of the currency by any significant amount,” Dr. Ganga said.
“It is not a situation where there is a piling up of demand for foreign exchange at the commercial banks”, Dr. Ganga emphatically stated.
Dr. Ganga provided details which illustrate that the current foreign exchange reserves held by the Bank of Guyana and the commercial banks were in excess of the 2015 figures.
“Commercial banks have increased their foreign exchange holdings. In 2015 they had a gross holding of US$357M, as of September 2016 it was US$388.4M and we are expecting the commercial banks to hold approximately US$403M by the end of the year,” Dr. Ganga revealed.
“The (commercial) banks have money and they have quite a lot, it is not a small amount,” Dr. Ganga added.
“The Bank of Guyana had US$598M at the end of 2015, currently we are holding close to US$625M which is much more than last year. You can see therefore that there is an increase in foreign exchange availability from the holdings,” Dr. Ganga asserted.
The BOG Governor said that an increase in the circulation of Trinidad and Tobago and Barbadian dollars in the Guyanese economy has been noticed and that this indicates that these currencies are being converted into Guyana dollars then used to purchase US currency.
“Since 2014 we have had a significant supply of CARICOM currency in the (Guyanese) system more specifically, for example, we had an increase in Trinidad and Tobago dollars from TT$9.1M in 2014 to TT$24.4M in 2015 and in November of 2016 TT$38.3M. You will find that it is very difficult to get foreign exchange in Trinidad in particular, so what is happening is that we have this flow of TT dollars coming into Guyana, converted to Guyana dollars and then used to purchase US dollars,” Dr. Ganga explained.
“We have also had a significant inflow of Barbadian dollars. From 2014 of BD$8.3M to BD$13.5M in 2015 and as at November 2016 it is at BD$12.3M. So you can see that we are also supplying foreign exchange to other countries in the region,” Dr. Ganga added.
“Suriname also has major issues and we find that it is happening at the border where there is a conversion of cash from Guyana dollars to US dollars and then repatriated to Suriname,” Dr. Ganga said further.
Minister Jordan said that the issue will be addressed.
With regard to the issue of difficulties of remitting monies, Dr. Ganga dismissed the assertion and assured that there is no problem and confirmed that all commercial banks in Guyana have at least one corresponding international bank.