The Peoples Progressive Party (PPP) has issued a warning to Government that its intended move to introduce stricter regulations and closer monitoring of the foreign exchange market will have devastating consequences.
According to the PPP any attempt ‘to tighten foreign currency trade’ will be counter-productive and will lead to more capital flight, greater hoarding of foreign exchange and even less foreign and local investments. “PNC governments in the past have travelled this path before with destructive consequences on trade and commerce in the country. On the other hand, we have witnessed how the economy grew and how the Private Sector rapidly expanded in an environment of economic liberalization and free trade.”
The Opposition party is calling on 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 recognize 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” says the PPP.
The Private Sector Commission (PSC) also made similar calls for Government not to introduce stricter regulations on the foreign exchange market, citing that such a move would have the certain effect of “accelerating the capital flight which has already begun with the erosion of confidence in the economy.”
The PSC also warned against the stated intention of Government to “introduce restrictions preventing the unfettered 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 Private Sector Commission had said it “wishes to remind Government that the country has gone down this path before with disastrous consequences to the economy. The Guyana economy can ill afford the certain deleterious effects of history repeating itself.”
State Minister Joseph Harmon during a post Cabinet presser on Thursday announced that the Bank of Guyana has come up with a series of new regulations to closely monitor the local foreign exchange markets, following reports of shortages in the market and allegations of foreign currency hoarding.
Harmon had also confirmed reports that overseas based entities were remitting large amounts of foreign currency to their foreign accounts, with reports suggesting one entity remitting over US$100M. A situation which Harmon said would be “sanctioned.”
“The Bank of Guyana is therefore expected to issue a number of guidelines with regards to the new regulations and monitoring,” he said. Harmon added that these will 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.
“I think what the (Finance) Minister has recommended here and what the (Central) Bank will do is that it will strengthen its monitoring capacity and ensure that rules and regulations by which these banks operate that they hold them on a much closer and tighter leash,” the State Minister asserted.