Richard Lord

Fi­nance and the Econ­o­my Min­is­ter Lar­ry Howai says Cen­tral Bank Gov­er­nor Jwala Ram­baran is to an­nounce changes to the re­cent­ly im­ple­ment­ed sys­tem of al­lo­ca­tion of for­eign ex­change in the next few days.Howai told leg­is­la­tors yes­ter­day that the new sys­tem, im­ple­ment­ed re­cent­ly by Ram­baran, was the cause of some con­cern and had been re­vis­it­ed and ad­just­ed.He was speak­ing dur­ing his pre­sen­ta­tion of a mo­tion to ap­prove the First Fi­nance Com­mit­tee Re­port for de­bate in the House of Rep­re­sen­ta­tives.

The mo­tion seeks to sup­ple­ment and trans­fer mil­lions of dol­lars in the 2013/14 na­tion­al bud­get.

The min­is­ter said the "big tick­et items" in­clude a re­quest for an in­crease in the bud­get by $3.8 bil­lion. Some $1.2 bil­lion of the al­lo­ca­tion will be for pay­ment of salaries, NIS, Co­la, al­lowances for pub­lic ser­vants, in­clud­ing the set­tle­ment of new col­lec­tive agree­ments for over 20,000 dai­ly-paid work­ers, $1.6 bil­lion for in­fra­struc­ture de­vel­op­ment for projects such as the Diego Mar­tin and Point Fortin high­ways and $1.2 bil­lion for the needs of var­i­ous min­istries, in­clud­ing Na­tion­al Se­cu­ri­ty.

Ad­dress­ing the re­cent for­eign ex­change sit­u­a­tion, Howai said the coun­try was ex­pe­ri­enc­ing tight­ness in the mar­ket and not a cri­sis in the al­lo­ca­tion of for­eign ex­change, say­ing that hap­pens from time-to-time.He said, how­ev­er, that he was aware busi­ness­peo­ple want­ed their for­eign ex­change im­me­di­ate­ly and did not want to stand in line. Howai said based on that he ac­cept­ed their views that it was a cri­sis.

He quick­ly point­ed out that from a macro-eco­nom­ic point of view, "if you have $10 bil­lion in re­serves, there is no ques­tion that there is a cri­sis." He said a cri­sis would be if there was no for­eign ex­change and peo­ple were look­ing for it.

Growth in for­eign re­serves

But the min­is­ter point­ed out that the for­eign ex­change re­serves have grown from $8.9 bil­lion from late 2010 to $10.3 bil­lion present­ly.Howai said the re­al is­sue was the man­age­ment of the for­eign ex­change to al­low for a con­tin­u­a­tion of con­fi­dence in the sys­tem and to al­low for peo­ple to get the funds when they re­quire it.He con­firmed that the Cen­tral Bank had made some changes to the al­lo­ca­tion sys­tem "and to some ex­tent some of those changes may have im­pact­ed and re­sult­ed in the sit­u­a­tion in which we found our­selves."

Over the past months, many busi­ness or­gan­i­sa­tions, in­clud­ing banks, have com­plained about not get­ting their re­quired sup­ply of for­eign ex­change to ser­vice cus­tomers.It oc­curred af­ter Ram­baran in­creased the num­ber of in­sti­tu­tions which sup­ply for­eign ex­change to the pub­lic from eight to 12 and the process by which those in­sti­tu­tion are al­lot­ed the for­eign ex­change made avail­able by the Cen­tral Bank.

The move led to some ma­jor busi­ness­es be­ing un­able to source US cur­ren­cy to pay bills to cred­i­tors and even mem­bers of the pub­lic be­ing able to ac­cess small sums to trav­el and pay for their chil­dren's ed­u­ca­tion­al needs abroad.Howai said the Gov­ern­ment and Cen­tral Bank of­fi­cials had since dis­cussed this mat­ter. He said the Cen­tral Bank had al­so met with the banks and fol­low­ing the last meet­ing the banks were con­fi­dent the sit­u­a­tion would im­prove.

Look­ing ahead, Howai said there would soon be a ma­jor boost to the coun­try's for­eign re­serves.He added: "The (Cen­tral Bank) Gov­er­nor as­sures me that dur­ing the next week or so, sig­nif­i­cant con­ver­sions are ex­pect­ed from the en­er­gy sec­tor and these con­ver­sions will im­prove the sup­ply of for­eign ex­change in the mar­ket."The Cen­tral Bank is work­ing and has giv­en the as­sur­ance that they will do what is re­quired to en­sure that the fund­ing is avail­able."

He al­so as­sured that the Cen­tral Bank "has re­vis­it­ed the for­mu­la that they have (re­cent­ly) put in place to en­sure that we get our­selves out of this par­tic­u­lar sit­u­a­tion which has cre­at­ed the con­cern." But Howai said the min­istry would not stop there and would "con­tin­ue to mon­i­tor very close­ly" the sit­u­a­tion to en­sure it re­turned to nor­mal­cy.