Armed with daily reports from banks on their foreign currency sales and clearance, the Government has assured the business community that steps are being taken on multiple fronts to address any foreign currency woe that exists in the market.
This was according to President Dr Irfaan Ali during his address at the opening of the Suri warehouse at Little Diamond (East Bank Demerara) on Saturday. He nevertheless, pointed to one commercial bank with an above-average demand for foreign currency.
“On the issue of foreign currency. We’re now having a daily report on the clearance… and you have to have inter-bank clearing. (There was only one bank) with the demand as of yesterday. And when you look at that demand, in terms of Visa card and credit card clearance, it’s 15 per cent of the demand.”
Clearance refers to the process of transferring funds after a bank account holder, for instance, a business owner, wire transfers money to a supplier. While Republic’s credit card clearance averaged 15 per cent, President Ali noted that by comparison, the credit card clearance in the rest of the banking sector averaged five per cent. He made it clear that the Government is working on resolving the issue.
“We’re not sitting on this issue. We understand that the demand for business and transactions is increasing. So, we’re working on many different fronts right now to address this issue. They (business community) all know we are working on this, to ensure that we have a viable financial sector,” the President said.
A few weeks ago, the Bank of Guyana via a circular ordered all bank cambios to report their foreign sales to the Guyana Revenue Authority (GRA). According to the circular, which was sent out under the pen of Bank of Guyana Governor, Dr Gobind Ganga, bank cambios are now being requested to submit their invoices to the Commissioner General of the GRA.
Only the week prior, the PSC in association with the Guyana Association of Bankers Incorporated had met with and had discussions with the Bank of Guyana Governor with regard to the challenges faced by some local companies in accessing foreign exchange.
Stakeholders, a PSC release stated, had agreed that despite there being a shortage of foreign exchange at some banks, there is no overall shortage of foreign exchange in Guyana given that the aggregate supply of foreign exchange is meeting the aggregate demand and therefore the market remains in equilibrium.
According to the PSC, the Governor of the bank confirmed that while there is an intra-bank market that enables banks to share, the Central Bank must rely on moral persuasion in an effort to achieve a more efficient distribution of foreign currency availability. He also emphasised the fact that it is the responsibility of the Central Bank to ensure that the Government meets its macro-economic objectives.
The PSC, the Bankers’ Association, and the Bank of Guyana had all agreed to address the issues raised and promised to collaborate and work together for the benefit of all concerned, the release stated.
Previously, Vice President Bharrat Jagdeo had weighed in on the issue and said that the Guyana Government is going to consider the implementation of a daily reporting system to monitor the flow of foreign currency.
“We’ve been exploring something. I was thinking about this and we have to discuss it with the Finance Minister, that maybe we need a daily balance reported to the Central Bank of currencies purchased and sold, the daily balance at all the institutions, and then the list of demands. And you will see in most cases, that they are clear [of any shortages], but it’s just that [the US dollars] exist in different institutions,” the Vice President had explained during a press conference.
According to the Vice President, the foreign currency market in Guyana always has seasonal variations such as around the Christmas holidays when visitors come in and there is more foreign currency circulating. Likewise, he pointed out, there are low periods and it is during this time that more foreign currency will have to be supplied to the market.
