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Doma: Government spending caused US dollar shortage
The Downtown Owners and Merchants Association (Doma) says increased government spending has been causing periodic shortages of foreign exchange for several years. In a statement yesterday, the group said in 2000 government spending accelerated from $13 billion and that figure had tripled to $30 billion by 2004. “Major demands for foreign exchange in the form of national projects of gargantuan size and follow-on consumer demand now seem to have reached a crescendo,” Doma said.
It added that the situation is causing a profound “snowball” effect by exciting demand that would not have arisen but for fear of a continued shortage. Doma also said the current chronic shortage of foreign exchange is deflating confidence among the national community. The statement continued: “Recent announcements regarding the introduction of an auction system and the allotment of foreign exchange to many new dealers do not provide any adequate way forward nor does the announcement of injection of another US$200 million of foreign exchange. “We respectfully wish to point out that information regarding a new auction protocol are useless unless we are told what changes will be immediately made to relieve the chronic shortage that began more than five months ago. “If the introduction of a new system has caused scarcity and a lack of confidence, changes should be made and this is the information that we need.”
Doma said it has been reliably informed that the waiting list of unpaid foreign bills exceeds the new injection of US$200 million within just two or three industries. “In the final analysis, the availability of foreign exchange is a vital statistic of a country’s economic data. It is one of those stubborn indicators that speaks for itself and cannot be altered by symposiums, consultations or press announcements. We either have the foreign exchange or we do not!” the group said. “In our case, as the shortages become more and more protracted we are being reminded of the need for an urgent discussion of macro-economic policies. “These policy discussions will have to include some sensible talk about government spending, national priorities and the choice of projects and whether or not the Trinidad and Tobago currency is not overvalued at this time.”