Distributive policy

Necessary exchange policy


A pile of US currency. -JEFF K MAYERS

On Tuesday, a private motion by Independent Senator Amrita Deonarine calling on the government to present a foreign exchange (forex) policy to Parliament within six months was defeated for the third time.

All 15 government senators opposed the proposed amendments, while six opposition senators and nine independent senators voted in favour.

Senate President Christine Kangaloo broke the three-vote tie, as she explained, to keep the motion in its original form and maintain the status quo.

For the forex industry, this status quo remains difficult.

Among the critical forex issues in the TT is the distribution of an almost always scarce resource, with small and medium-sized companies complaining of a scarcity that has proven detrimental to their operations.

In December 2019, Republic Bank led reductions in maximum US dollar spending limits on credit cards in the banking industry, increasing the spending limit from US$15,000 to US$12,000.

Cash distributions to travelers have been even more limited for years.

Constraints on the availability of forex have also affected large corporations and even the government itself.

Then THA Education Secretary Kelvin Charles explained in November 2020 that 4,000 devices for schoolchildren on the island were stuck in a warehouse awaiting the availability of hard currency to pay for them.

In the first three quarters of its 2020-2021 fiscal year, Pricemart saw merchandise sales decline 21.8% due to reduced inventory imports related to currency shortages.

LJ Williams Ltd, which runs The Home Store, announced in February that currency shortages forced it to reconsider its investments in Trinidad.

In response to this, the government offered strawman tusks.

The Prime Minister chastised car dealers demanding more foreign currency in October 2020 saying he would rather use it to buy medicine than cars.

Public Administration Minister Allyson West on Tuesday called on restaurants to use local food sources to make French fries in the Senate, seemingly unaware of such past efforts and how unsuccessful they have been. These changes require major upgrades in production capacity as well as a shift in audience tastes.

The continued defense of the exchange rate by the government is a critical part of the supply and demand imbalance, creating an underground forex economy where the informal exchange rate is as high as TT$8 to US$1.

There is general agreement among economists extending even to the opposition that a devaluation of the TT currency will not help matters, but widespread concern over the fairness of the forex distribution remains. important.

Ms. Deonarine has called for the creation of an ombudsman to oversee the distribution of currencies in March, but the Central Bank must certainly play a role in resolving issues related to the allocation of this scarce resource.