For the past 6 years accessing foreign exchange has been a nightmare for local businesses. This is despite the fact that the Central Bank sells about US $100 million in foreign exchange to authorised dealers and banks on schedule every two weeks.
In 2020 alone Central Bank sold US$1.2 billion to specific authorised forex dealers. The government through various agencies also engages in provision of tens of millions of US dollars annually. Yet this was not adequate to meet the demands of the business and other sectors of the population.
At the end of 2020, Foreign Reserves stood at US$6.86 billion with the HSF at approximately US$6 billion. These are not finite buffers and require scrupulous management with strategies to boost foreign exchange inflows.
Local businesses continue to complain that the availability of foreign exchange to pay for imported goods is in crisis proportions. In a recent survey conducted by the T&T Chamber of Industry and Commerce and the T&T Coalition of Services Industries (TTCSI), 83% (170 firms) reported that they could not access enough foreign exchange to purchase raw material and some finished products from foreign suppliers.
Businesses in the Supermarket Association, Foreign Used Automobile Association as well as the Construction and Insurance sector are openly warning of increased costs of operation. These higher costs will be passed on to an already overburdened population who is reeling from unemployment, cut wages and the stress of living under Covid related restrictions, and the imminent threat of increased utility rates.
According to the survey, 66 per cent of firms (135) received less than 50% of their forex requirements from their local bankers in 2020.
Yet other business entities have been able to access foreign exchange, expand their operations and declare profits despite economic challenges faced by the rest of the country.
Lack of forex has resulted in drastic decreases in sales which has impacted on other aspects of their business operations, such as their inability to maintain supply chains which in turn has caused delays in restocking and meeting orders. Their inability to procure essential equipment and/or components has prompted more stringent credit terms and conditions from suppliers, which increased cost and their inability to meet commitments to foreign suppliers in a timely manner. This, of course, impacted negatively on their credibility which led to accounts and goods/services being placed on hold.
It means that particular businesses in Trinidad and Tobago have had their business reputation tarnished due to circumstances beyond their control, years of business credibility and confidence has been destroyed.
Average citizens have been suffering extreme difficulties to access even the most miniscule amount of foreign currencies. This has caused the emergence of a thriving albeit illegal black market in US dollars over the last few years.
The Minister of Finance and his Government has demonstrated complete failure over the last five years in providing the environment to encourage confidence in the economy, and consequent investment in any activity to generate foreign exchange.
Instead of pursuing the medical and sport tourism initiatives, amongst other plans, and projects underway which they found when they entered government in 2015, the current government shut down all those forward-thinking projects, disbanded their own Economic Advisory Board and replaced it all with NOTHING.
As the economy spirals downwards, as the foreign exchange crisis deepens, both the Minister of Finance and the Prime Minister have dug their heels further into their dysfunctional policies.
In these circumstances, MP Dave Tancoo urges all those affected to speak up and speak out. Let the country know the truth!
Davendranath Tancoo BA, LLB, MBA, LPC.
Member of Parliament