Opposition Leader and General Secretary of the Peoples Progressive Party (PPP), Dr Bharrat Jagdeo has blamed the government for creating a worrisome situation which has triggered a demand to hoard foreign currency.
“Supply is being affected. On the demand side very little has changed because there have been no significant growth, but what is picking up is the demand for gold currency because of an expectation that the rate is sliding or is going to slide and so even if its not for transaction purposes, it is because of expectations in people’s minds that the rate is going to slide and they want an edge. So even for those reasons alone, the rates, there will be serious pressure” said the Opposition leader.
Jagdeo also challenged persons who continued to maintain that the value of the Guyana dollar is stabilized, especially those contending that the rate of $230 to US$1 is only for credit card users.
Bank of Guyana Governor, Dr Gobind Ganga in a statement on Thursday refuted the claims made by the Guyana Manufacturing and Services Association (GMSA) that the real foreign exchange rate for the replacement of imported inputs into the sectors has risen to $230.00 GYD to $1 US.
According to the Governor “the rate quoted by GMSA is not a uniform transaction rate; rather, it is the online rate charged by one of the largest commercial banks in Guyana for its credit and debit card transactions, which represent a very small share of the Cambio market transactions.”
However according to Jagdeo “the reality is different and every single person who has gone to buy some currency knows that this is so, excepting the Ministry of Finance…It is not only for credit card transactions, it is for most transactions.”
The former President, who is an economist by profession said as a result of the government’s failed and lack of economic policies,there will be an emergence of an underground markets for foreign currency, which can further destabilize the local dollar.
“A lot of the transactions will come out of the cambios and banks and will go out on the streets- underground economy, once again. The cambios themselves will, maybe in some cases, post one rate on the receipt and people have been doing this already. So you’re [my] customer, you pay me $225 or $230 and I will put $215 on the receipt for the central bank purpose” Jagdeo mentioned.
The Bank of Guyana Governor said in his statement that for the period between March 14 to 17, 2017, the weighted average buying rate was G$214 while the weighted average selling rate was G$218 based on its records.
Moreover Dr Ganga posited that the bulk of cambio transactions were satiated by a few banks and has advised businesses “not to depend solely on one bank, but to pursue other banks to meet their demands for foreign currency at a competitive rate.”
The Bank of Guyana Governor noted that the situation is further exacerbated by exporters who are hoarding their foreign currencies in their retention accounts.
“Instead of using these balances to complete their transactions, they have been sourcing foreign currency in the market. This has added further pressure on the demand for foreign currency and reduced the supply to the market” Ganga remarked.
The Leader of the Opposition said that if the current foreign exchange situation is allowed to progress, it will harm the future of all Guyanese.
He said he even made some recommendations to the government, which he labeled as either unconcerned or incompetent, to fix this problem.
Jagdeo said the government needs to shift its focus from burdening the citizens with taxes and start implementing policies, which encourages production, especially in areas, which generate foreign revenue like mining, forestry and agriculture.
If the situation is not urgently addressed, Jagdeo warned of a major increase in prices of commodities with import content.
These would range from household products like food and clothes as well as commercial items such as equipment and machinery.