Business owners say they are bracing for a worsening of foreign currency shortages in 2017. In recent weeks, local manufacturers and importers have complained about difficulties with foreign exchange, with severe shortages of US dollars, Euros, yen and other hard currencies.
Abrahim Ali, public relations officer of the San Juan Business Association, said he does not expect the situation to improve any time soon.
"This problem did not start yesterday and has been going on for years. It has got from bad to worse. Local importers will have problems to pay their suppliers in the new year. The situation for business people to get foreign currency will get even worse," he said.
Ali added: "We also have problems to get the yen. Local businesses do a lot of business with Japan and China and those Asian countries. The problem is we can not even get those currencies either."
He said the main cause of the problem is that T&T is an energy dependent economy: "OPEC signed an agreement and there will be production cuts in 2017. This will lift prices a bit and we will see some increase in the supply of US dollars. However, T&T's problems will continue if Government does not diversify quickly so that the country can earn from other sources."
The extent of the problem was confirmed by Gabriel Faria, CEO of the T&T Chamber of Industry and Commerce, who told the T&T Guardian in a message that members of the country's largest business group have been affected.
The worsening forex situation comes on the heels of a report by the Economic Commission for Latin America and the Caribbean (Eclac), which is projecting a 4.5 per cent decline in the T&T economy for 2016.
In an interview on CNC3's Business Watch, Nigel Baptiste, managing director of Republic Bank, said the purchase of US dollars is linked to other currencies because US dollars are needed to purchase other currencies.
Liquat Ali, president of the Couva/Point Lisas Chamber, said local importers had been asking their suppliers to accept payments using British pounds, Euros and other currencies.
"Some of the foreign suppliers started to accept other currencies when local importers did not have the US. The problem is that the pressure has moved from people wanting scarce US dollars to the other currencies," he said.
Ali, too, said he does not expect the situation to improve much in 2017.
"The OPEC agreement will cause oil prices to rise. We are already seeing prices over US$50 and it should get better. However, if we get past this we must diversify the economy to an extent where this will never happen again."
Daphne Bartlett, president of the San Fernando Business Association, said foreign exchange distribution system is not equitable and she forecasts closures of many small and medium businesses in 2017 as a direct result of the currency shortages.
"It seems that only a few bigger businesses are getting most of the foreign exchange and not the SME's. This will have a ripple effect and will cause unemployment and other negative effects," she said.