The Governor of the Central Bank put a big-money wine on businesses and individuals over the last couple months. Not that he has admitted it, not that he has clarified and apologised for it, and not that he has committed to not doing it again.
We know now, though not from him, that he adjusted a 21-year-old system of foreign exchange allocation just so, without consultation and without telling the country that he was so doing.
Essentially, four new foreign exchange dealers—AIC, DFL, GFC (Neal and Massy) and Ansa Finance—are being allocated foreign exchange in addition to the traditional eight institutions; whereas previously 90 per cent of foreign exchange was allocated and ten per cent auctioned, now 50 per cent is allocated and 50 per cent auctioned; and whereas before customers could bid during the auction for any amount they needed, now they can bid for only 25 per cent of the auction. In short, less foreign exchange is now being spread across more buyers. Any housewife could have told the Governor what problems would result.
Instead, one day, business people and individual citizens, during their normal banking routine, walked into banks, requested foreign exchange and were told there was none or they could get only US$500 or US$1,000 upon receipt of their airline ticket (for individuals who needed overseas travel money). This went on for that week, and the next, and the next. Naturally, people were mystified. How come, all of a sudden, they could not get US dollars?
Individuals thought it was just them, the small man being squeezed again. But then the T&T Chamber of Industry and Commerce, the T&T Manufacturers Association and the Supermarkets Association issued press statements saying they too were unable to get foreign exchange.
Then appeared Arawak, the chicken people, saying that it too only received the jokey amount of US$500 and that the main function of the company’s accountant has been to travel from bank to bank searching for US dollars.
Through all this, the Central Bank Governor would only repeat that there was no forex shortage. Up to that point, the country had no knowledge of a change to the system of foreign exchange allocation.
Seeing an opportunity present itself for some political mileage, the Opposition convened a news conference in mid-May to explain what they knew; their conclusions pertained to devaluation and black market.
In response to the Opposition’s conclusion about potential devaluation, Finance Minister Larry Howai—and only in response to a reporter’s question—for the first time provided brief official information: there was a change in the allocation system, more licensed buyers were now getting US dollars from the Central Bank and a larger percentage was being auctioned.
The Bankers Association (BATT) has been and continues to be unacceptably reticent on these developments that directly affect its members and the hundreds of thousands of customers they serve.
Meanwhile, the Central Bank Governor held his line that there was no shortage but started to speak in terms of “tightness” while injecting more and more millions into the financial system.
To date the country has not had a comprehensive statement from the Governor about what prompted him to amend the allocation system, why he amended it at this time, and why there was no announcement beforehand and what the repercussions were likely to be.
Chief executive officer (CEO) of the TT Chamber of Industry and Commerce, Catherine Kumar, confirmed in an interview on I95.5fm this week that her organisation and the TTMA were never consulted on the change nor were they even told that the change was coming. The BATT, she said, was consulted but she was unsure at what point in the process. She also said she has been unable to have the why-now question answered.
To solve the shortage-that-isn’t, the Central Bank Governor has been dipping into our foreign exchange reserves in order to inject more and more millions into the system to address a problem that he has created.
How this problem occurred and worsened since April Fool’s Day is significant because it tells the country how important it is to be intensely aware of who are appointed to hold high offices across sectors. It is also important for what it tells us about lack of consultation, lack of communication with the public and a pointed disrespect aimed at all sections of the population.
Even if the foreign exchange shortage-that-is’t is resolved (and Ms Kumar has said July and August months will be the real test), the Central Bank Governor must step forward, take responsibility and apologise to the country for performing an intense and protracted dollar wine on our collective heads. Those holding high office, entrusted with the nation’s business, cannot be allowed to make such huge decisions unilaterally and secretly then retreat to top floors of big buildings to resist the country’s calls for accountability.