The Bank of Guyana (BoG) yesterday rebuked the Georgetown Chamber of Commerce and Industry (GCCI) over its comments concerning the alleged foreign currency shortage in the country.
In response to the comments, the BoG reprimanded the GCCI for labouring under the mistaken impression that the central bank existed to ensure that foreign currency was available to its members at the times and prices they demanded.
It suggested the GCCI’s “energies would be better spent engaging either the banks or the bankers association, who are also members of the private sector, with a view to better understanding the factors that influence the availability and pricing of foreign currency in the domestic market.”
According to the BoG, the GCCI’s view of the open market, “is simply not how an open market economy operates, and is simply not how foreign currency availability and pricing are determined where floating currencies are concerned.”
The GCCI’s statement had called for an independent intervention as it had lost “confidence in the leadership of the Bank of Guyana or its capacity to implement policies that will guide Guyana’s financial sector to support growth being experienced in the real sector”.
It added, “According to its own statistics, the Bank of Guyana has failed to intervene in the ongoing foreign currency shortage issue, despite the private sector complaining of a lack of US dollars since 2019. Therefore, the Chamber views the central bank’s inaction to activate mitigating strategies to address the foreign currency situation as a disregard for business.”
The GCCI stated that it was dissatisfied with the BoG’s lack of action, vision, and modern financial policies to improve access to financing for local businesses. It added that the country’s economy was one of the fastest-growing in the world, with oil revenues generating hundreds of millions of US dollars annually.
The BoG went on to explain in its response that it was an independent central bank with a clear mandate defined by law and in keeping with international norms and standards for central banking. Its objectives include fostering domestic price stability through the promotion of stable credit and exchange conditions.
“The law establishing the BoG also stipulates that the Guyana dollar is a freely floating currency, traded in a market whose prices are determined by prevailing market conditions, that is to say demand and supply,” it stated, adding that it remained committed to discharging its mandate and engaging with the private sector on matters of concern in a mutually respectful manner.
Last week, several businessmen complained of experiencing a shortage of foreign currency at local banks. Chairman of the Private Sector Commission Paul Cheong said last Friday that his organisation had written to the Guyana Association of Bankers Inc requesting a meeting.
Cheong said that with conflicting reports circulating in the public domain, it would be best to meet the association to have the claims addressed.
He had said that as recently as Friday, he had received a complaint of no foreign currency being available at some banks.
However, BoG Gover-nor Dr Gobind Ganga had refuted that claim.
“There is no shortage. What you will probably have is an instantaneous shortage but everyone has enough…,” Ganga said in an invited comment to Stabroek News.
The BoG informed that as of February 22, 2023, the banking system had US$99.5 million available for transactions. It stated that while “the available funds are not evenly distributed among the banks, there is enough to cover the cash flow needs of transactions arising from businesses in Guyana.”
The BoG also explained that cash flowing to the banks was cyclical, and as such there will be periods of excess liquidity and periods when there will be a limited supply. It asserted that it was continuing to monitor the foreign currency position in Guyana to ensure there was no disruption nor adverse impact on economic activities.
Analysts have pointed out that there are clear imperfections in the foreign currency market here and as such, greater interventions by the central bank may be needed.
