Deteriorating Guyana Dollar could wipe out companies- Manufacturers

Though the Government in recent weeks has been maintaining that there is no shortage of Foreign Exchange, manufacturers have expressed their concerns with the $230 Guyana Dollars being paid for US$1.

In a statement yesterday (Wednesday, March 23, 2017), the Guyana Manufacturing and Services Association (GMSA) said it has deliberated deeply on the impact that deteriorating Guyana Dollar has on the sector.

“The (GMSA) Board is (disappointed) at the rate of deterioration of the Guyana dollar and has estimated that the real exchange rate when available being used for the purchase of foreign exchange is $230.00 for the replacement of imported inputs into the sectors,” the GMSA said.

As such, the manufacturers stated that they are concerned about their ability to keep prices stable.

“The rise in the price of the U.S. dollar will have far reaching effects on our country as a whole both socially and economically… This situation has the potential to further increase unemployment and at worst wipe out Companies,” the Manufacturing Association said.

The new rate along with the burden of the changes in the VAT regime, the companies added, will also cause production costs to move upwards.

The GMSA is encouraging all of the sectors to implement cost cutting exercises and have noted that some entities have started to rationalise employment.

It is further calling on the Minister of Finance to hold broad consultations on this matter, “urgently”, and the Bank of Guyana and the Government to take steps to stabilise the value of the Guyana Dollar immediately by injecting funds into the system. It believes that the rate is being driven by supply and demand.

On March 02, 2017, Governor of the Bank of Guyana, Dr. Gobind Ganga told media operatives that there had been an increase in foreign exchange market transactions and banks have to ensure that the demands received for foreign exchange are legitimate before releasing those demands.

“In January this year, we would have seen purchases by bank Cambios to be about US$82.7M. BY February 18, we have seen bank Cambios again purchases US$158M so by the end of February; you would have seen much more in terms of the purchases. In terms of sales, in January, sales were US$95.1M, up to February 18, US$164.6M” Dr. Ganga explained.

He added that concerning the non-bank Cambios, purchases have been at US$3.2M and sales at US$2.4M in January 2017. Up to February 18, 2017, purchases of US$5.6M and sales of US$6.3M were seen.

Previously, the Bank of Guyana had stated that the circulation of Trinidad and Tobago and Barbadian dollars in the Guyanese economy has been noticed and that this indicates that these currencies are being converted into Guyana dollars then used to purchase US currency. As such, the purchasing of TT and Barbadian dollars had temporarily ceased.