…says Foreign Direct Investment would move from a ‘trickle to a halt’
The Private Sector Commission (PSC) says it has read with consternation the pronouncements of State Minister, Joseph Harmon relating to the introduction of stricter regulations and closer monitoring of the foreign exchange market in Guyana and is “strongly” condemning such a move.
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.
“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.
Finance Minister, Winston Jordan, had stated in the media that some exporters and importers are conducting mutual foreign exchange transactions, outside of the exchange market structure.
“Some companies have been seeking to pay for export and repatriate profits earlier than required in the business cycle, thus creating a demand for foreign currency. Aggravating this untenable situation is the action of some net foreign exchange earners, who are demanding foreign currency from the market, while hoarding their foreign currency holdings,” Jordan had said.
Harmon had also confirmed reports that an 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 PSC contends however, that this move by the Government 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 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.”