Apr 07, 2017 News
-matter to be raised in Nat’l Assembly
The People’s Progressive Party (PPP) has expressed alarm over what it says are reports that
Central Bank has threatened cambio operators to be derisked by commercial banks unless they trade at specific rates.
The Parliamentary opposition party, in making it clear yesterday that the “abuses” by Central Bank, as the regulator, are a violation of the law, said it will be raising the issue in the National Assembly.
This latest development will come as businesses continue to grapple with delays in wiring monies overseas.
Central Bank had announced a number of measures including cambio operators not having more than a $3 spread between the buying and selling rates.
A number of factors, including reduction of earnings from lower exports last year, saw Guyana falling short of the 2015 figures by over US$30M.
In addition, a number of neighbouring countries, facing a cash shortage of especially US dollars, have been trekking to Guyana to buy up.
According to the PPP, the measures by Central Bank are of tremendous concern.
The party said it viewed, as high handed and unconstitutional, the actions of Central Bank and Minister of Finance, Winston Jordan, in issuing instructions and directives to banks and cambio operators.
“It must be noted that these cambios operate under specific laws and any attempt to force these cambios to buy or sell currency at specific rates is in violation of the law,” PPP said in a statement issued by Irfaan Ali, a senior Parliamentarian.
It was pointed out that the country’s foreign currency market operates based on a floating exchange rate and is therefore determined and influenced by demand and supply.
“The Minister of Finance cannot fix the rate based on his own wishes. As has been noted by many businesses there is a shortage of US dollar in the economy. To address this, the Central Bank needs to address the supply side and not dictate against the realities of the market,” PPP insisted.
PPP is arguing that the economy is weakening. It said that the currency is going to continue to lose value. This, coupled with reduction in foreign direct investments (FDI) and severe shortfall in foreign currency earned from export trade for forestry and agriculture, will have an impact.
The situation will only get worse, the statement said.
PPP also claimed that it received information that the Central Bank has threatened cambio operators to have them derisked by the commercial banks and to have their accounts closed if they do not sell currency at the specific rates stipulated by the Central Bank.
“These instructions and directives are in contravention of the laws and an abuse of authority by the Central Bank. The People’s Progressive Party has also learnt of direct threats…to cambio operators who do not follow the instructions of the Governor and sell their foreign currency at a dictated rate.”
These abuses, the party said, are a clear indication of the undemocratic and authoritative approach that the Ministry of Finance is taking to impose unsustainable exchange rates on the operators.
“The People’s Progressive Party is highly concerned with this new development in the economic sphere of our country and we assure the citizens that we will continue to be vigilant against the economic ineptitude of the APNU+AFC Government. The PPP would be raising specific questions in relation to this issue in the Parliament.”
In recent months, the US selling rate has been creeping up with one commercial bank even advertising credit card selling rates at $230 for one US$1.
Government, in admitting that the country’s foreign earnings fell short by over US$30M last year as compared to 2015, said it had found several cases of abuses in the trade.
These include neighbouring countries coming here, and a large spread between the buying and selling rates at some cambios.
Central Bank trade of Trinidadian and Barbados currencies were suspended as a result.
Central Bank issued a circular earlier this year to cambios to ensure that that the spread is not more than $3M and that board rates are what is being used.
At least one money transfer company, controlled by a Trinidadian conglomerate, was pulled in for not releasing the overseas funds to local banks.
A number of local companies were also being accused to using multiple banks to transfer large amounts for other than legitimate transactions.
Throughout it all, Central Bank has insisted that it has been releasing foreign currencies intermittently to the banks. As recently as last Friday, approval was granted for at least one commercial bank to receive more than US$700,000.
Some customers have been complaining of waiting for over a month for transfers to play suppliers.
Normal customers have been complaining of being told by commercial banks of no monies even for as little as US$1,000.
Republic Bank yesterday had advertised rates for wire transfers $210 (selling) while the buying rate was $208.50.
It was the same at the Guyana Bank For Trade and Industry. Demerara Bank was selling for $204, according to its website.
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