Latest update April 18th, 2024 12:59 AM
Jan 18, 2017 News
Former Minister of Housing and Water – now Parliamentary Opposition’s point-person on the economy, Irfaan Ali, is saying that the lack of foreign currency supply in Guyana is as a result of declining sectors that
traditionally bring in the exchange.
The Parliamentarian told media operatives during a recent press conference at Freedom House, Georgetown, that by examining the latest statistics with regards to the performance of several sectors, the evidence stands out.
“You would have noticed that sugar declined by 19 percent, rice would have declined by 14 percent, forestry would have declined by 33 percent and manufacturing would have declined by seven percent.
“These are the sectors that primarily bring in most of the foreign currency. So (if) these sectors are on the decline and are declining, then ultimately, there must be an impact in the supply of foreign currency on the market.”
Ali said that the Minister of Finance, Winston Jordan “cannot argue that supply is in fact not drying up when you have such a drastic decline in these sectors that earn foreign currency.”
“One would also remember that we had low oil prices 18 months ago so the resources expended by the government to buy oil for example for GPL (Guyana Power and Light). The GPL would have expended less foreign currency to acquire a barrel of oil that was somewhere around US$37 per barrel and now is approaching US$50- plus per barrel.
So on every barrel of oil you’re using US$20 more. So that is also affecting the supply of foreign currency.”
He added that with the exception of gold, all the export sectors are performing poorly.
“The demand for foreign currency remains very strong and the supply of foreign currency remains very weak.”
Ali pointed out that due to the absence of the PetroCaribe arrangement, the State is expending more foreign currency which is adding to the supposed shortage.
“We also had the situation in the past when we paid for oil under the PetroCaribe arrangement with rice. So we did not suck up our foreign currency to pay for oil.
“We paid for oil under that transaction with rice so more foreign currency remained in the country. With the advent of the new administration, we know that PetroCaribe deal has been cancelled and that also would have tremendous impact on the foreign currency.”
Ali continued that most of the foreign currency comes from gold and the proceeds from the sale of this resource, directly to the Central Bank and rebutted comments made which suggests that cambios are hoarding foreign currency.
The politician said that if by some extent this is true, the “only factor” is that there is lack of confidence in the economy where there is lack in investment; where there are limited new investments coming in; and as a result, people are holding on to the foreign currency as a “safety net or a safeguard.”
The Member of Parliament (MP) said that despite these concerns, the opposition is yet to see statements from the Bankers Association amongst other stakeholders and questioned the reason for this.
“There has been a lot of official talk; there is a lot of complaint; I think we have to get statements from the Bankers Association from the Private Sector on this matter, it is a serious matter and has severe implications for the economy.”
Less than a week ago, the Georgetown Chamber of Commerce and Industry (GCCI) told Kaieteur News that is was concerned that local banks are making claims that there is a shortage of foreign currency even though the Central Bank insists otherwise.
As a result, the entity was scheduled to meet with the Banking Association to ascertain who is really telling the truth.
Efforts to get a comment from the President of the GCCI, Vishnu Doerga yesterday, were futile.
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