Transparency needed in currency allocations | Editorial
At the root of the unpleasant exchange between businessman Inshan Ishmael and Prime Minister Dr Keith Rowley is the very serious problem of the distribution of scarce foreign currency.
While the public conversation has been distracted by the bacchanal aspects of the crass talk circulating between the two men, the substantive issue of foreign exchange allowances is of considerable importance to every citizen. This includes those who do not need to purchase foreign currency.
In the current liberalized market, there is no priority for who gets and who doesn’t. It is up to the commercial banks to make their own decisions in this regard. They too have their clients “too big to fail”, whose demand for foreign currency may be prioritized over others. Much further down the scale is the large sector of customers coming to buy relatively small amounts for vacation travel or study abroad. Who gets how much, if any, is apparently too often non-negotiable.
The big problem, however, is with businesses that rely almost exclusively on foreign currency, such as Mr. Ishmael’s roll-on roll-off motor vehicle business.
Indeed, the president of the organization of used car dealers abroad, the Association of Automobile Dealers of Trinidad and Tobago, is asking the Central Bank to investigate how commercial banks allocate currencies to their customers. . He too suspects that there is a certain favoritism and an unfair difference in treatment in this regard. He seems to have information that while some customers are offered a paltry US $ 5,000, others are favored by “hundreds of thousands” of such large “greenbacks”.
With the country’s foreign exchange position recently bolstered by an injection of US $ 644 million in special drawing rights, the government now has some leeway to define an appropriate allocation policy aligned with national development priorities. .
In this, the manufacturing sector and imported inputs for agriculture would be the obvious priority candidates. The government has previously supported the needs of the country’s manufacturing sector, through foreign exchange allocations to the EXIM Bank.
It is a clear anticipation and present abroad in the public imagination that statements in this area will constitute a highlight of the presentation of the budget of the Minister of Finance on Monday.
We have taken this path more than once before, on which the availability of foreign currency to those whose business operations depend so heavily on its availability, is a matter of survival, or bankruptcy.
What is very different in the current context is the great expansion of business ventures in the country and the openness of some of the new players to question the previously established order. The imperative of greater loyalty to accountability and transparency is a pillar on which free enterprise and democratic society are built, all the more so in these times. Accordingly, the banking community would do well to provide some sort of response to allegations of favoritism and preferential treatment.
More fundamentally, the signal is clear for the future. Now is the time to move from foreign currency dependent businesses to foreign currency generating businesses.