Dear Editor,
I applaud economist Dr Ramesh Gampat for penning his brilliant pieces on economic matters. I really enjoy reading them. He has done a useful exercise to educate readers on important economic concepts relating to Guyana. On the topic of remittances (money received from Guyanese living in the diaspora) and growth, he attributes most of the (positive) growth that took place in Guyana between 1992 and 2014 to remittances. He notes there was a spurt in remittances from 2002 and concedes that he could not understand why there was this sudden rise. Dr Gampat may have underestimated the role of remittances in the economy of Guyana prior to 2002. However, I concede I do not have official figures or even estimates of remittances prior to 2002. But I believe it was huge since Guyana’s economy was bankrupt during the late 1970s and in the 1980s and survival literally depended on remittances from overseas Guyanese.
I wish to point out that there may not have been a sudden spike in remittances in 2002; remittances were always part of the economy especially since Guyanese began migrating in the 1960s and in droves in the 1970s sending back money for friends and loved ones or repaying debts that were incurred to make the trip abroad.
There may have been better accounting or measurement of foreign currency coming into the country from overseas Guyanese beginning in 2002. More and more foreign money may have passed through official channels since 2002 rather than through the underground economy which was very large prior to 2002 (almost double the official economy as Prof Clive Thomas had argued).
It should be pointed out that wire transfer companies were established around that time in Guyana and more and more Guyanese accessed wire transfers to send money to their former homeland.
So definitely, there was better accounting. Also, exchanges did not take place exclusively on Water Street or cambios as was the norm between 1991 and 2002; most of these unofficial exchanges were not reported to official bodies like the Bank of Guyana.
Currency hustlers traded money unofficially – buying and selling – and these exchanges were not reported to official bodies. In short, money came into Guyana and left Guyana without being reported prior to 2002. Also, after 2002, less foreign exchange took place unofficially at stores, gas stations, among friends, and other business places. After 2002, more and more people exchanged money at banks (maintaining deposits for safe keeping); these banks were required to keep proper accounting figures that were passed on to the central bank. In short, after 2002, there was more official transaction of foreign currency. So there would have been better measurement of remittances coming into the country after 2002 rather than before that year.
I should note that I recall as a youngster since the early 1970s, when there were foreign currency restrictions and a ban on imports, there was a thriving foreign currency exchange underground market. People exchanged their foreign currency unofficially. Banks were hardly used to exchange money and there were no cambios (those came into existence around 1991); cambios were not required to report their currency transactions to official bodies. Businessmen smuggled the foreign exchange (bought directly from customers or from local agents) abroad to purchase contraband goods that were in turn smuggled back into the country for local sale.
Another common method used to acquire foreign exchange and that escaped Bank of Guyana measurement was overseas Guyanese would give the foreign money to a Guyanese business person living abroad and his associates (business) in Guyana would dole out the equivalent in local money; they always gave a higher rate than the official government bank rate. This practice started around 1972 and continued long after the PPP came into office in 1992.
Yours faithfully,
Vishnu Bisram
