Tuesday, February 28, 2017

We need to earn forex, curb consumer demand


Terrence Farrell, chairman of the Cabinet- appointed Economic Devel- opment Advisory Board, has voiced concern that in the last two years, $3 billion from our foreign reserves went into foreign-currency transac­- tions, that is, supporting the Trinidad and Tobago dollar.

This comes at a time of dwindling revenue from the energy sector, which accounts for the majority of our foreign-exchange earnings. Our appetite for foreign goods continues unabated, even though we cannot afford it at the existing rate of demand.

The Government seems unwilling or unable to do anything about curbing or supplying the demand for foreign exchange as some claim it is without a clue as to what to do and is just ho­ping for a miracle to happen for the oil price to go over US$100 a barrel again.

In the meantime, manufacturers who have long since lost their competitive edge because of the high cost and diffi­culty of doing business in this country are having difficulty exporting their products.

A major foreign exchange earner like Accelor Mittal was allowed to close its steel-making operation and leave without Government making a serious effort to assist in keeping the plant in operation. This short-sighted approach not only reduced the foreign-exchange inflows but caused new demand from the many downstream steel producers who now have to import material.

Manufacturers are finding difficulty getting foreign exchange to buy materials and equipment for their production facilities, yet find that importers have ample stocks of imported goods to com- pete against their products.

The Government would be best advised to heed the concerns of Dr Farrell and move quickly to encourage new sources of foreign- exchange earnings while attempting to curb excessive demand. Failure to do both is not an option. Just look at Venezuela.