MP for Oropouche West and Opposition Shadow Minister of Finance, Dave Tancoo, today stated that the action taken by Finance Minister Colm Imbert and the Central Bank to inject another $50 million US into the banking system will do absolutely nothing to mitigate the ongoing crisis of foreign exchange availability that is currently strangling the operations of Small and Micro Enterprises (SMEs).
MP Tancoo explained that because SME owners have not been able to access forex over the counter at the local banks, in the quantities required, they have been forced to use their credit cards as the only available alternative for forex purchases to sustain their business operations.
As the Minister knows, this foreign exchange shortage, particularly to the SME sector, has existed for the last few years.
With Divali and Christmas fast approaching, it is not surprising that SMEs are procuring their holiday stock via credit card transactions, given the unavailability of cash forex, thereby accounting for the increase in credit card purchases.
MP Tancoo said “It is only because of public pressure that the Minister has belatedly awakened from slumber. However, his proposed solution to inject more money into the system with the allocation mechanism as it currently
exists, is a misdirection that he knows will not address the real underlying problem of transparency and equity in the sale of foreign exchange by Central Bank and by authorised dealers who benefit from this allocation.”
With nothing in place to guide the sales to businesses and to the public, MP Tancoo insists that this increased allocation will again be sent directly to those entities who currently already benefit from the bulk of the sale of foreign exchange. There will be no resultant improvement for SMEs or regular citizens who today are suffering from the inability to access foreign exchange.
MP Tancoo asserted, “This will not increase forex availability over the counter to SMES and individuals and therefore will have no impact in dealing with the demand from this sector. Instead, those conglomerates and business houses who are already getting, will just get more.”
He recommended a more targeted approach, to ensure that forex reaches the SMEs who have long been unable to access this critical financial service locally. To do otherwise, is to continue to facilitate the inequity in the distribution of forex, allowing the credit card crisis to persist.