Government’s intention to tighten “foreign currency trade” will have destructive consequences on trade and commerce in Guyana, Opposition Leader Bharrat Jagdeo has warned.
Guyana Times International understands that on Monday the Government issued a circular to Cambios and the local banking sector informing them of the regulated rates for foreign currency. However, this did not go down well with Jagdeo who lashed out at the Government, describing the move as “absolute madness.”
Jagdeo, who is an economist by profession, told this publication on Monday evening, that this move now means that Government is hastening the decline of the economy.
The circular issue will limit the spread of US dollars and other foreign currencies to a $3 bracket.
Meanwhile, the parliamentary Opposition in a statement on Monday, also stated any attempt to control the flow of foreign currency in the economy will be counterproductive and will lead to more capital flight, greater hoarding of foreign exchange and even less foreign as well as local investments.
The Party reminded that the People’s National Congress (PNC) Governments in the past had embarked upon this route before, but the outcomes were devastating.
“On the other hand, we have witnessed how the economy grew and how the Private Sector rapidly expanded in an environment of economic liberalisation and free trade,” the PPP noted.
The Party is urging the Government to stave off its plans to impose restrictions and undue regulations on the movement and circulation of foreign exchange in the economy.
“Rather than blame the Private Sector and foreign companies for the shortage of foreign currency in the country, the Government should first accept its mismanagement of the economy and recognise that the shortage of foreign currency is due not only to its incompetence but also to its regime of policies and measures which are undermining the Private Sector, destroying commerce and trade and sapping confidence from the economy – replacing it with fear, intimidation and uncertainty,” the PPP explained.
Commenting on the circular, an influential private sector operator told this publication that such a move will drive a lot of business underground as already being unfolded in the mining sector with the new taxation measures.
Government has also received scathing criticisms from the Private Sector Commission (PSC) over its announced intervention.
According to the organisation, the new regulations will only drive investors away, warning that the stated intentions of Government to introduce restrictions will specifically affect the repatriation of earnings of foreign companies operating in Guyana.
“Foreign Direct Investment in the economy has already slowed and a policy which prevents the repatriation of the earnings of these companies has the potential to move the influx of investment from a trickle to a halt,” the body noted.
The PSC also reminded that Guyana had gone down this path before with disastrous consequences to the economy.
Minister of State, Joseph Harmon during a post-Cabinet press briefing announced that the Bank of Guyana, as the regulatory body for banks and non-bank cambios, was instructed to respond with stricter regulations and closer monitoring of the foreign exchange market – following reports of foreign exchange as well as foreign currency hoarding.
“The Bank of Guyana is, therefore, expected to issue a number of guidelines with regard to the new regulations and monitoring,” he said.
Harmon said these would include ensuring that exporters repatriate their export earnings at the banking system as is required and conducting close monitoring and examination of bank and non-bank cambios to maintain orderly market behaviour and stability.
According to Harmon, Finance Minister Winston Jordan was adamant that there was no foreign currency shortage but rather “disequilibrium in the market”.