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Vice President (VP) Bharrat Jagdeo speaking during his press conference on Friday said the Bank of Guyana “…has to ensure that the money supply, along with the fiscal policy are conducive to growth and, in the long run, [and] don’t cause us to suffer the dreaded Dutch disease, especially in light of the oil and gas proceeds flowing into the economy.”
There have been mounting expressions of concern that there is a shortage in foreign currency, particularly the US dollar but the Bank of Guyana has rejected the claim. According to the Bank no such a shortage exists, particularly for US dollars. The Bank also said the banking system has an average monthly turnover of more than USD500 million and has an adequate supply of US dollars to meet demand.
The Georgetown Chamber of Commerce (GCCI) in a recent statement expressed its dissatisfaction with the Bank’s lack of action, vision and modern financial policies to improve access to financing for local businesses.
GCCI said “According to its own statistics, the Bank of Guyana has failed to intervene in the ongoing foreign currency shortage issue, despite the Private Sector complaining of a lack of US dollars since 2019. Therefore, the Chamber views the Central Bank’s inaction to activate mitigating strategies to address the foreign currency situation as a disregard for business.”
The VP admitted there should be an engagement between Guyana’s commercial banks, the Georgetown Chamber of Commerce (GCCI), the Private Sector Commission, and the bankers’ association regarding foreign currency concerns but not without taking aim at the GCCI.
According to him “We can’t be pandering every time the Georgetown Chamber of Commerce wants to issue a statement. We can’t be pandering to that. We have to look at the macroeconomic objective. So, when we have a firm view on the macroeconomic objectives and if we believe that there is a sustained shortage, we have the means to supply the market.”
He said that seasonal variations can see the appreciation of foreign currency rates coming to the detriment or benefit of select parties, explaining that, “We have not one aggregate market, but every cambio in this country operates like a mini market within the aggregate market. So, one bank would have an abundance of supply, but maybe, some other bank may not have the same amount of currency at that same time.”
Jagdeo suggested the establishment of an inter-bank market to facilitate sharing and added that some banks practice foreign currency hoarding.
“So, we have to now work at promoting greater exchanges. I was thinking that maybe we need a daily balance, reported to the central bank of currencies purchased and sold, and the daily balance at all the institutions and then the list of demand, and you will see in most cases that they are clear, but they exist at different institutions,” he stated.
This concept, he said, will be discussed further with the senior finance minister.
“The government has to ensure that aggregate demand and aggregate supply in the markets reach some equilibrium, given the objectives of the Central Bank and the Ministry of Finance.”