Writing in Saturday’s Village Voice News, Ally noted that the Guyanese dollar (GYD) remains officially pegged at approximately G$208–209 to US$1, but argued that the effective market rate is closer to G$240 to US$1, indicating significant depreciation.
“In reality it is 240 to the US dollar. Why the rapid depreciation? Official answers are expected,” Ally wrote.
He referenced remarks made in Parliament on February 6, 2026, reported by Stabroek News the following day, which stated: “An average of US$2 Billion leaking out of our Banking System causing a heavy rate So that is why we are facing a heavy increase as it relates to the cost of living in Guyana.”
Ally argued that the discrepancy between the official peg and the market rate suggests the peg may no longer reflect underlying economic realities. He identified several possible drivers, including inflationary pressures, trade imbalances, foreign exchange shortages, capital outflows and declining investor confidence.
Against this backdrop, he raised the question of whether Guyana — now an oil-producing nation — should examine the option of dollarisation, replacing the Guyana dollar with the US dollar as legal tender.
Ally outlined several factors that policymakers would need to consider, including inflation control, trade competitiveness, monetary policy autonomy, financial sector development, fiscal discipline, oil revenue management and the impact on vulnerable populations.
He acknowledged that dollarisation could provide benefits such as currency stability, reduced exchange-rate risk for oil exports priced in US dollars, and potentially increased investor confidence. However, he stressed that the move would carry significant trade-offs.
Among the principal risks, Ally highlighted the loss of monetary sovereignty, noting that Guyana would forfeit its ability to set interest rates or adjust exchange rates in response to economic shocks. He warned that reliance on the US dollar would expose the country more directly to fluctuations in the US economy.
He also cautioned that a strong US dollar could erode the competitiveness of non-oil sectors such as agriculture and manufacturing by making exports more expensive, though a stable currency could also attract foreign investment.
In examining international precedents, Ally pointed to Ecuador (which adopted the US dollar in 2000), El Salvador (2001), and Panama (which has used the US dollar since 1904). He noted that while Panama has maintained relative stability and growth under dollarisation, Ecuador and El Salvador experienced mixed outcomes, achieving macroeconomic stability but facing constraints in responding to external shocks.
Ally said these examples underscore the need for careful assessment of both the advantages and structural limitations of dollarisation.
He suggested that if Guyana were to pursue such a path, it would require technical engagement with institutions such as the US Treasury Department and the International Monetary Fund (IMF), though not necessarily a formal bilateral agreement with the United States.
To mitigate potential risks, Ally proposed the establishment of a stabilisation fund to manage oil revenue volatility, stricter fiscal discipline, stronger financial regulation, and accelerated economic diversification to reduce dependence on the petroleum sector.
He also raised concerns about financial inclusion, noting that while dollarisation could improve access to international credit markets, it might also lead to higher borrowing costs and reduced access to credit for small businesses and low-income households.
Ally concluded that the question of replacing the Guyana dollar with the US dollar is a complex policy decision with far-reaching implications for economic sovereignty, trade competitiveness and long-term development, and should be subject to informed national debate.
