Below is a commentary by Dr Leslie Ramsammy on the shortage of available US currency in Guyana and the consequent development of an underground market that is supplying the currency exorbitantly above the Government imposed $G3 spread between the buying and selling price for the US dollar, which he poignantly asserts is further fueling the black market trade of the same:
There is a flourishing black market for the US dollar in Guyana right now. The black market for the US dollar which essentially died in Guyana by 1990 is seriously back today.
APNU+AFC is in a futile spin and denial mode, but truth cannot be simply dashed aside. The Bank of Guyana is desperately trying to provide APNU+AFC with some buffer by its own futile efforts to obfuscate and to deny there is any shortage of US dollars in Guyana. APNU+AFC can spin until it turns blue, it will not change what every Guyanese, including the leaders of APNU+AFC and the Bank of Guyana know – the black market for US dollar has returned to our country with a vengeance.
Whether the shortage of US dollars in the official market is real or engineered, the fact is there is a real black market where people are purchasing US dollars as high as $G230 to $US1. One airline operating in Guyana is charging people at a rate of $G250 for one US dollar. Some travel agencies are charging people at a rate of $G220 for a US dollar. At Banks and official Cambios, the rate for $US1 which was around $G206 at the end of 2016 is presently around $G218, a definite decline of the Guyana dollar. The Guyanese business community and others who may need US dollars, such as people who travel outside of Guyana, are finding it difficult to procure US dollars from Banks and Cambios.
The Inter-American Development Bank (IDB) in its first quarterly Caribbean Report for 2017 has confirmed that the Guyana dollar suffered a significant decline against the US dollar in 2016, a decline that has accelerated in 2017 so far. The Guyanese Business Community has formally complained about the erosion of the value of the Guyana dollar against the US dollar and the decline in the availability of foreign currency. The Banking Community has confirmed they are unable to meet demands for US dollar. Media personnel have tested the market and can confirm three things – first that it is difficult to purchase US dollars from Banks and Cambios, second, that when available, the rate is between $218 to $220 and, third, there is a black market where one US dollar is purchased at a rate of above $G230.
Interestingly, even as APNU+AFC, mainly through its Finance Minister, insists there is no validity to the claim there is a shortage, a declining value and a flourishing black market for US dollars, the Bank of Guyana sought to ban trading US dollars for Barbadian and Trinidadian dollars.
This is clear evidence that APNU+AFC/Bank of Guyana know the US dollar is under serious stress in Guyana. Further evidence that APNU+AFC is aware of the real shortage of US dollars and the declining value of the Guyana dollar comes from the fact that APNU+AFC instituted new rules for the Banking Community which established a $G3 spread between the buying and selling price for the US dollar. This is a desperate and stupid bid to stem the decline in the Guyana dollar and and has predictably catalyzed the US dollar black market.
Part of the problem is the dramatic decline in US dollar earnings by rice and sugar, traditional pillars and powerhouses in foreign currency earnings. In spite of the increased in gold earnings, Guyana lost up to $US40M in export earnings in 2015 and 2016 and might well have bigger losses in 2017, mainly because rice and sugar have been decimated by reckless APNU+AFC policies.
Compounding the problem is a meager foreign direct investment (FDI) profile. APNU+AFC had promised and even boasted that an APNU+AFC government would immediately propel FDI. After 22 months in office, FDI has dried up. Many local businesses have not invested, foreign businesses have curtailed their investments and no significant new investment has come. The big splash in 2015 and in 2016 with expensive trade and investment teams in the US, Canada, the Caribbean and Europe have resulted in zilch investment.
Meanwhile the Bank of Guyana external reserve has fallen again below $US600M. At the end of 2015, it had fallen to $US598. At the end of 2016 it had not significantly improved with a reserve of about $US620M. At the end of the first quarter, the external reserve stands at $594M. Under the PPP Government the reserve fluctuated in the last 10 years between $US700M and $US1B. The PPP had largely maintained the reserve at about a 6-8 month export earnings. Presently, it stands at about a three-month export base. This is not a coincident – it is a telling statistic.
No matter how hard the Finance Minister and the Governor of the Bank of Guyana spin the truth, APNU+AFC, like its parent, the PNC in the 1970s and 1980s, is presently presiding over an economy in which foreign currency availability is limited, the Guyana dollar has devalued and there is a black market for US dollar and foreign currency. These truths at the moment are incontrovertible.