Foreign currency shortage – the usual half story

Apr 20, 2024 Features / Columnists, The GHK Lall Column

Hard Truths by GHK Lall

Kaieteur News – There is Mr. Fixit and there is Mr. Answerit. The latter is Mr. Bharrat Jagdeo, Guyana’s chief policymaker and, of more recent vintage, this country’s chief English Language skipper. The issue was foreign currency shortage, and the response from the doctoral one was the usual sketching and stretching. Mr. Jagdeo had some good points, and then there were those that he left hanging.

GHK Lall

There is no “sustained shortage” of foreign currency. Restrict self to US dollars and leave British pounds and Japanese yen alone. Mighty Yankee currency, it is. The VP may be correct with his carefully chosen “sustained”. But there is tacit admission or recognition that a shortage of greenbacks there is. In the short-term there is shortage, as opposed to the long-term (sustained), where the big man with big responsibilities says there is no such thing. By way of digression, where is Dr. Ashni Singh and the Bank of Guyana, and why are they not pronouncing on things like these? Perhaps, the expensive State media apparatus should be dismantled, and let the chief spokesman of the PPP Government, Jagdeo, do all the talking. He does so, anyway.

There is a shortage in the streets and banks, which is why the price of US to Guyana has climbed past $220 and flip-flops around that threshold. Demand and supply, Mr. Jagdeo, which is what he himself identified. Aggregate demand and aggregate supply do have a nice academic ring to them. I would never have thought that they taught such things at Patrice Lumumba U. There is a shortage in the present, which is why people are lining up at their banks and told to come back another day. To his credit, economist Jagdeo didn’t dodge that, but how does he reconcile the short-term (shortage) with the long-term (no sustained shortage). On the aggregate demand side, who are the players that are sucking up all that aggregate supply? I think there is a tough story there. For there are those smaller people with their forms and their feet sore from beating about from bank to bourse for the precious US dollar.

No question that lots of outside money coming into Guyana (supply). But I think that I discern a case of the regular Guyana in action. The big people get to bag the dough, with constricted amounts of US dollars left for the lesser fry to fight over. This goes on too long, i.e., the short-term goes on without any sustained ease, and there is the prospect of US$1: GY$230 and beyond. Yes, I deliberately borrowed and recycled Dr. Jagdeo’s selection of “sustained.” It is the least I can do to flatter the man, show him some regard. We are told that the Bank of Guyana has currency depth and strength. If that is so, and it is closely monitoring the situation and injecting currency accordingly, then there is another factor that could be in motion relative to the currency shortage. To put this harshly, who the hell is cornering and squeezing the local currency market leading to artificial shortages? Who are the ones being allowed to do so, have the insider status that gives them such clearance? I know that the foreign people put in plenty of American money locally, but they take more than that right back out, via special dispensations. But accounting for this still does not make the shortage evaporate.

The tumults have to quiet down to make some headway. By application of commonsense, the little buyers and sellers, though fairly numerous, do not amount to much in the big currency picture. Then, there are the big importers and players, who are sure to overrun, like an army, a significant swath of foreign currency territory. Considering the level of activity in this country in recent times in both directions (demand and supply), there should not be these suspicious on and off circumstances of normalcy and then urgency. There are only certain characters, movers and shakers, in this country capable of influencing the local foreign currency mart to the extent that there is this chatter and concern about currency shortage. Like everything else here, there are insiders and the rest who make up the lines that are visible and rowdy. I think that this is what the chief policymaker, Dr. Jagdeo, was clever enough to duck, as a contributor to the shortage that he states is not of “sustained” energy. Dr. Jagdeo should do like the PNC’s Amna Ally, who is now the latest inspiring nursemaid for equanimity and equity in dealing with wrongdoing and wrongdoers, regardless of their political pedigree. Jesus Christ, this can’t be happening. But when developments like these emerge into the public square, I am reminded about why I find this country so endearing. The push, therefore, is for the Vice President to call out the vice lords who run all manner of rackets in this town, including currency ones. He knows them, for they are among some of his closest people. Trusted too; and look at where currency matters stand.

So, where does all this leave currency shortage that is not of a “sustained” variety? My take is that the Central Bank has its cushion, but it is neither thick nor heavy. Two: the big infusions from incoming foreign presence are a wash, even a drain, because they go back home. Three: local heavyweights (legit ones) account for a considerable fraction of the foreign currency pool but need more. Four: this squeezes the medium and smaller foreign currency consumers. And five: there are the, ah, speculators, who create their own openings and make their own markets. Still, this may not be the full story. But it is more than Barry Jagdeo’s half story.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

doctoral, GHK Lall, Guyana, hard truths, Mr. Bharrat Jagdeo

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