PE­TER CHRISTO­PHER

Se­nior Re­porter

pe­ter.christo­pher@guardian.co.tt

Amid con­cerns over a po­ten­tial­ly re­duced Christ­mas stock, the busi­ness com­mu­ni­ty is wel­com­ing a dis­cus­sion with Min­is­ter of Fi­nance Colm Im­bert about the lat­est re­duc­tion in for­eign ex­change avail­abil­i­ty.

On Fri­day, Re­pub­lic Bank in­formed cus­tomers that it would be re­duc­ing its US-dol­lar cred­it card lim­it from US$10,000 to US$5,000 ef­fec­tive Sep­tem­ber 21.

In a re­lease ad­dress­ing a news­pa­per ed­i­to­r­i­al high­light­ing the im­pact of this re­duc­tion, Min­is­ter Im­bert yes­ter­day con­firmed that he “will be hold­ing dis­cus­sions in the near fu­ture with the Cen­tral Bank, the com­mer­cial banks and the busi­ness com­mu­ni­ty to dis­cuss the caus­es and ef­fect of in­creased de­mand for for­eign ex­change, and strate­gies to deal with the cur­rent chal­lenges, and the most ap­pro­pri­ate pol­i­cy for the al­lo­ca­tion, man­age­ment and dis­tri­b­u­tion of for­eign cur­ren­cy, as well as strate­gies to in­crease the repa­tri­a­tion of forex earned over­seas by lo­cal busi­ness­es and for­eign busi­ness op­er­at­ing in T&T.”

He ac­knowl­edged that the amount of for­eign ex­change made avail­able by the banks to the pub­lic for the eight-month pe­ri­od (Jan­u­ary to Au­gust, 2023) was ef­fec­tive­ly the same as last year for the same pe­ri­od, but al­so not­ed that there had been an in­crease in de­mand.

“Go­ing fur­ther to look at the amounts of for­eign ex­change sold to the pub­lic in 2021 and 2019, ex­clud­ing the full COVID-19 year of 2020, one will see that in 2023, the sales of for­eign ex­change to the pub­lic for the first eight months of 2023 is 26.8 per cent high­er than the same pe­ri­od in 2021 and 4.3 per cent high­er than the same pe­ri­od in 2019,” Im­bert said in the re­lease.

“The is­sue, there­fore, is not sim­ply the avail­abil­i­ty of for­eign ex­change in 2023, com­pared to pre­vi­ous years, but rather, it al­so is the de­mand.”

Fur­ther­more, Im­bert sug­gest­ed that the height­ened de­mand had been cre­at­ed by in­ter­net shop­ping ac­tiv­i­ty by the pub­lic.

“There has al­so been an ex­plo­sion in on­line shop­ping over the last sev­er­al years, which is dri­ving up the us­age of US dol­lar de­nom­i­nat­ed cred­it cards, as con­sumers take ad­van­tage of the avail­abil­i­ty of cheap­er goods over­seas. There is al­so the ques­tion of im­port­ed in­fla­tion in­creas­ing the unit cost of im­port­ed items,” he said.

How­ev­er, mem­bers of the busi­ness com­mu­ni­ty yes­ter­day ques­tioned how the pub­lic could have drained the avail­able forex, giv­en that the cred­it lim­its had been in place for years.

Web Source CEO Lin­coln Ma­haraj chal­lenged the sug­ges­tion, not­ing that based on his own as­sess­ments, peo­ple were typ­i­cal­ly on­ly shop­ping for ne­ces­si­ties rather than lux­u­ry items since the pan­dem­ic.

“The lim­it puts the brakes on the de­mand. If there is an uptick in shop­ping on­line or any­thing like that, again, I know there is no uptick be­cause in jobs, peo­ple have been dis­placed, com­pa­nies have closed down since COVID and com­pa­nies are not see­ing post-pan­dem­ic prof­itabil­i­ty again, oth­er than the banks, if you ask me,” Ma­haraj said.

Con­fed­er­a­tion of Re­gion­al Busi­ness Cham­bers chair­man Vivek Char­ran said he wel­comed Im­bert’s de­ci­sion to dis­cuss forex sup­ply and de­mand, but was un­sure there had in­deed been greater con­sump­tion by the pub­lic, even with re­port­ed in­creased trav­el over­seas.

“One would ex­pect that over the sum­mer there will be more trav­el and more trav­el with some greater the use of forex. That be­ing said, the use of forex was lim­it­ed be­fore. I don’t think it is the sec­tor could say that the banks were able to sup­ply them with all their needs for forex, even be­fore this,” said Char­ran, who not­ed that sev­er­al sec­tors have al­ready strug­gled to im­port stock due to the lim­its pre­vi­ous­ly in place.

“We are hap­py to lis­ten to what he (Im­bert) has to say. We in the busi­ness sec­tor are very con­cerned about it. I think peo­ple are in a pan­ic state. Be­fore the sit­u­a­tion arose, peo­ple, you know, had very large re­serves, very large cred­it lim­its. Over a pe­ri­od of years, the bank kept cut­ting, so it was cut from $25,000 to $15,000 to $12,000 to $10,000 and now it is $5,000.”

Char­ran not­ed that the cut will af­fect small busi­ness­es who use cred­it cards to or­der stock ahead of the Christ­mas sea­son.

“Is it go­ing to af­fect how much peo­ple can im­port in the short-term from now un­til for Christ­mas?” said Char­ran, who not­ed that sev­er­al small busi­ness­es look to the sea­son to gen­er­ate rev­enue to sup­port their en­ter­prise, “What is go­ing to hap­pen to them? Are they go­ing to be able to con­tin­ue to pay their rent, or their rev­enues for small busi­ness­es go­ing to fall? So, I think we have a le­git­i­mate con­cern. It’s not about crit­i­cis­ing the Gov­ern­ment, is not about cre­at­ing prob­lems, right. Ob­vi­ous­ly, the an­nounce­ment that the cred­it lim­its are cut by 50 per cent is one of great con­cern.”

He said mem­bers had heard mur­murs that less US was be­ing re­leased to the banks and there had been some fall­out in for­eign ex­change cir­cu­la­tion due to de­clin­ing re­turns in the en­er­gy sec­tor.

The lat­ter point was ac­knowl­edged by Im­bert in his state­ment.

“In ad­di­tion, the repa­tri­a­tion of for­eign ex­change earned through ex­port earn­ings, which reached a high in 2022, is de­creas­ing, as some busi­ness­es are choos­ing to keep their forex over­seas, for var­i­ous rea­sons,” Im­bert said.