I call for a national debate on this question: Should Guyana consider adopting the USD as our national currency?
Vendors want an internationally accepted currency. Guyanese travelling abroad need the same thing. Before the floating exchange rate system came into being back in 1991, we periodically had to devalue our currency. Let’s solve this problem once and for all time by adopting the USD.
The world has changed since the 1990s. We live in a world of globalization, with more movement of goods, services and people, so our economic life would become much easier to navigate if Guyana were to adopt the USD.
Blogger Socrates asked a commonsensical question: Would business folks bring in USD at $210 to US$1 and take it out at $230 for US$1? It would make no sense.
Let’s US dollarize the economy. All companies (gold mining, oil company, etc) who earn USD would pay their employees in USD. Citizens would deposit in their USD accounts at banks, and pay their plane tickets with USD withdrawn from their USD bank account.
The financial authorities would increase/decrease the money supply by lowering/raising NIS and tax rates, and vice versa. They could abolish the cambio and there would be no more speculation.
Consider this hypothesis under the present conditions: I want to bring in US$10 million to start a factory to manufacture and export furniture using Guyana’s woods. I have a deal with a foreign company; they will take all my output. What happens when I need to pay for supplies and expatriate my profits? I would be stuck; I can’t get enough FX or I will be gouged having to pay $250 for US$1.
The bottom line is that having a national currency that is internationally acceptable helps the economy to attract foreign investment and grow. Not having such a currency stifles growth. Let us have this debate now. Economists at UG should write and publish papers on this issue. Newspapers should do editorials on it. Bloggers should take a position and debate the matter.