The local remittance sector is bracing itself for what could be “a hard knock” arising out of the unfolding crisis in the United States economy and the slowdown in the remittance rate to Guyana could begin to impact significantly in as little as two weeks time, according to President of the Georgetown Chamber of Commerce Chandradat Chintamani.
The local business community has good reason to be concerned over the unfolding global market meltdown that now appears more ominous in the face of the rejection of the United States House of Representatives of a US$700 billion bailout that would have allowed the US Treasury to finance the purchase of bad mortgage debt from struggling commercial banks, Chintamani told Stabroek Business. The US Senate has since passed a revised bill and the House is to vote on this today.
“Remittances from the United States contribute significantly to economic activity in Guyana. One only has to observe the increase in the number of remittance services to understand the extent to which people who live and work in the United States support economic activity in this country,” Chintamani said.
Stabroek Business has spoken with two local remittance companies about the likely impact of the downturn in the United States economy on the sector. While one declined to comment on whether or not there had been a fall in remittance levels in recent weeks the other confirmed that there had been “a slowdown in the inward movement of money” through the remittance services. “It is not a question of what will happen in two weeks’ time it is a question of what has already been happening, the official who spoke with Stabroek Business on the condition that the remittance agency not be named, said.
Chintamani said that he was concerned that a possible slowdown in remittances had come just before Christmas, a period during which the business sector realizes more than 60 per cent of its trading activity.
Meanwhile Chintamani told Stabroek Business that the Chamber will shortly be securing “an expert” to engage GCCI members in discourse on the likely impact of the downturn in the US economy on Guyana and the region. “We expect to secure someone who has an understanding of both the US economy and the economies of this part of the world and we expect to do so “within the next ten to twelve days,” Chintamani said. “I believe that it is important that the local business community have clear understanding of what could lie ahead and I believe that that is the responsibility of the Chamber.” Chintamani said.
Meanwhile, according to Chintamani those businesses that focus on their “internal efficiencies” will ultimately be better positioned to survive the current crisis. “We have to focus on the expansion of our manufacturing and service sectors so that whenever there is a challenge that is external the impact will be lessened by the fact that we have rendered our economy sufficiently resilient to absorb those shocks.” he said.
Meanwhile Chintamani told Stabroek Business that the extent of vulnerability of small, fragile economies like Guyana’s, meant that there are factors which, “however much we seek to improve our internal efficiencies,” are likely to be beyond our control.
“The message that we really want to send to our members is that they need to look at areas of opportunity that may exist even at a time of economic crisis. We want to have our members break their businesses down into various cost centres and address the challenges of cost within those centres.”
According to Chintamani it will not always be practical to pass price increases on to consumers. “There will be a time when consumers will resist price increases irrespective of whether a monopoly exists or otherwise. Part of the reason why we must address those internal efficiencies is because there will be times when businesses will have to absorb those price increases,” Chintamani added.
