Government issues warning to those working to de-stabilise the economy

By Delicia Bailey

Finance Minister, Winston Jordan has issued a warning to those who neglect to play by the foreign currency market rules which could potentially de-stabilise the fragile economy. To these persons he says “Government stands ready to act decisively if our current entreaties fail.”

The Minister, took the opportunity to speak on the matter at the opening of the new Camp Street, Georgetown, Corporate Head offices of Citizens Bank/ Guyana Inc, yesterday (Friday January 20, 2017)

According to Jordan “in a market with limited players in which one or two are dominant, it is incumbent on all of us to act responsibly, to play by the rules so as to avoid dis-intermediation and interruption of orderly flows in exchange.” To this end he says Government would continue to use moral suasion to return the market to stability but is this does not work there could be more decisive action being taken.

In recent weeks, there have been media and other reports of foreign currency shortages, however, Jordan says there are several factors at play that have “artificially stressed” the foreign exchange market.

He has also called out the media for their role in “the speculation and hysteria” and he is now assuring the public that “the level of foreign exchange in the system indicates that the current demand can be met without speculation in spite of the fall off in export earners” namely sugar, rice and timber.

In fact, the Finance Minister says, the Bank of Guyana (BoG) as of December 31 last had in its reserves US $616M and increase from the previous year which was US $598M. Added to this he says, the Central Bank was also able to sell to commercial banks in November and December, last year some US $30M to “smooth out spikes during seasonal demand.” Another US $12M was then sold to non-bank Cambios during the same period.

It is interventions like these, Jordan says, the BoG will continue with; when they are warranted.

He reiterates that all each player within this market has a role in ensuring their conduct does not have a negative impact on the foreign exchange market and wider economy.

“In recent times due to the increased speculation in the exchange market activities, commercial bank cambios have been charged with the undertaking the necessary due diligence to ensure orderly market behavior.” He adds that while this has positively impacted the market “other main stakeholders such as non-bank cambios, exporters and importers also have a responsibility to ensure their conduct does not have a negative impact.”