Tobago business groups: SMEs feeling forex pinch

SMALL and medium-sized enterprises (SMEs) in Tobago are being gravely affected by the shortage of foreign exchange in the country, says Tobago Chamber of Industry and Commerce president Curtis Williams.

There has been mounting concern among businessmen within recent weeks that the limited access to foreign exchange could affect the importation of certain food items, possibly prompting higher prices ahead of the hectic Christmas season.

Businessmen are also calling on Finance Minister Colm Imbert to help ameliorate the situation by pushing for the private banking sector to review how it distributes foreign exchange.

In an interview on November 2, Williams said the shortage of foreign exchange is a growing concern for the chamber.

“It has become a pressing issue, affected various sectors and created significant challenges for both businesses and individuals,” he said.

“Small and medium-sized enterprises are among those affected. Unlike larger corporations, SME’s have limited access to foreign credit lines and must rely on local banks for forex, putting them at a disadvantage.”

Williams said many SMEs have reported delays in securing US dollars, forcing them to scale back operations or seek alternatives, which may not always be feasible.

“These challenges, in turn, impact employment and economic stability, compounding the issue.”

Furthermore, he said, the forex shortage has affected individuals seeking foreign currency for travel, tuition payments or medical expenses abroad.

Williams added restrictions and limited allocations have left many scrambling for alternatives, including turning to the black market, where exchange rates are significantly higher than official rates.

He believes a multi-faceted approach is required to address the forex shortage.

“Diversifying the economy beyond oil and gas, promoting exports and encouraging foreign direct investment are critical steps.”

Williams said the government and Central Bank must also work closely with the private sector “to create a more transparent and efficient forex distribution system.

“Without sustainable solutions, the forex shortage could undermine the country’s economic resilience and hamper growth in the long term.”

The Tobago Business Chamber also expressed serious concern about the forex situation.

The chamber’s chairman Martin George said, “We have raised this issue more than once in our budget presentations. We have raised it as a means of easing the forex shortage for TT by suggesting that the minister of finance and the government immediately and unconditionally repeal the Foreign Investment Act.”

He added, “You have this archaic piece of legislation on the books which definitely acts as an impediment and a block to any direct foreign investment in Tobago, which obviously will then benefit Trinidad because if somebody is investing to construct a guesthouse, a villa, a hotel and they are bringing in the foreign exchange, then obviously some of the purchases will have to be done in Trinidad for the goods and material, so everybody is going to benefit from it.”

George told Newsday there is “absolutely no reason for the Foreign Investment Act to remain on the books.

“Yet the government stubbornly clings on to it, for whatever reason, God alone knows, while the nation sinks into the abyss of the forex deficit daily.”

On October 30, Scotiabank announced that from December 1 it would lower credit card US$ limits and restrict overseas Visa debit card point of sales and ATM withdrawals.

Following calls for the minister of finance to intervene, on November 1, Imbert in a post on X said, "The request by the media and some businessmen that the Minister of Finance regulate access to forex distributed by the private commercial banking sector is interesting. This could be construed by other stakeholders as political interference, so I will look at this very carefully."