No foreign currency challenges, Kaieteur News report mischievous – Finance Minister

GINA, GUYANA, Tuesday, December 6, 2016

Finance Minister, Winston Jordan has reacted with “consternation” to a report by the Kaieteur News about banks facing an alleged foreign currency crisis.

In an interview today, with the National Communications Network (NCN), Minister Jordan stated that such reports had the ability to destabilise the foreign exchange market and “ultimately destabilise the development of Guyana.”

The Minister, who was accompanied by Bank of Guyana Governor, Dr. Gobind Ganga, noted that no comment or reaction was sought from any Government official (despite the use of photographs of officials, none of whom were actually mentioned, to bolster their claims).  The Minister described what was reported as a “lot of hearsay”.

He recalled that the recent appearance of several critical articles published by the newspaper, had given him cause to ask its editor if there was an agenda against Government, adding, “I don’t want to feel this is so. This is supposedly an independent newspaper.”

“I have no problem with people attacking the government, criticising the government …but for you to use situations like these baseless, meaningless, misleading headlines to among other things scare, add to the scare that is going on that is being used by the opposition as it relates to the budget, one begins to wonder what really is the agenda,” Jordan stated.

Jordan further added that as an independent newspaper, the media house should practice integrity, fairness and balance in its reportage.

Lending his voice, Dr. Ganga said the headline and article were both “misleading”. He explained that the article could be undermining, create false expectations and “obviously put the whole economy in a spin because of the negativity that was portrayed!”

Dr. Ganga reiterated that there is no evidence that any such purported crisis is looming.

The fact was cited that commercial banks have actually increased their gross foreign exchange holdings. These figures were given as being US$388.4M as of September 2016 versus US$357M in 2015 by the BOG Governor.

The Central Bank, he added had US$598M in 2015; this figure has increased to approximately US$625M in 2016 and commercial banks are projected to have close to US$403M by the end of this year, Dr. Ganga explained. “There is an increase in the holding of foreign exchange and hence there is availability from the holdings.”

The BOG Governor said that there has been an increase in demand from some foreign entities outside of the traditional banking system, particularly since 2014. He used the example of increased supplies of Caricom currency in the local banking system. “More specifically we had an increase in Trinidadian dollars from $9.1M in 2014 to $24.4 M in 2015”.

The article also claimed that commercial banks were adversely affected by having to wait for a supply of foreign exchange. No so, said, the BOG Governor. “There is not piling because of a demand for foreign exchange at the commercial banks. No there are not people who are waiting. You will find the commercial banks know who are the legitimate customers and who are not, and there is the demand from elsewhere out of Guyana.”

The Kaieteur News article also cited the alleged crisis as due in part to the de-risking due to Caribbean Financial Action Task Force (CFATF) regulations. This issue was also described as false by the BOG Governor who said that all of the banks had found alternative partnering or “corresponding” banks overseas.

According to the Kaieteur News, a number of local banks reportedly confirmed that for the first time in years, they are restricting customers who want to remit large sums of monies abroad to pay for services and goods, among other things. The newspaper claimed that the shortage has been exacerbated by a number of factors, not least among them the severing of ties of a number of foreign banks with local financial institutions.

The article also listed a number of under-performing sectors and pressure on the illegal drugs trade which it described as compounding a situation which can only get worse.

 

By: Paul McAdam