Thursday, February 22, 2018

Who gets foreign exchange?*

The Minister of Finance tells us that the commercial banks and other foreign exchange brokers are expected to give preference to trade and manufacturers via what he calls an honour system. However, he claims that the banks are not doing this but are favouring their clients that provide them with the most income. Also there is a view that government should not get involved in favouring certain people, since this violates the IMF Article VIII that is against placing restrictions on payments/transfers for current international transactions. This, I presume, includes government’s intent to make the Ex-Im Bank a foreign exchange trader to support exporters and the imports of manufacturers that supply the local economy. Indeed, the government is advised that, instead, it should reduce its control over the foreign exchange market.

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