Imbert: Central Bank agrees with me on credit-card usage

FINANCE Minister Colm Imbert said he felt vindicated by the Central Bank in his previous claim that credit-card usage took a big bite out of foreign exchange (forex) allocations.

While he has blocked many reporters online, Newsday obtained a copy of a tweet he posted on X/Twitter on December 27.

He said, "The Central Bank just reported that over 43 per cent of foreign current transactions exceeding US$20,000 between January and October 2024 were done using credit cards, and credit cards utilise over US$2 billion of our forex annually.

"Yet when I said this earlier this year, there were howls of denial."

On November 15, Newsday reported Imbert as saying a 50 per cent hike in the use of credit cards could be partially blamed for Trinidad and Tobago's current forex crunch.

Speaking on November 14 at UWI, St Augustine at the Principal's Research Award Ceremony, he said private bankers had recently told him that over the past five years, the number of credit cards issued had risen by 50 per cent and likewise, credit-card spending had risen by 50 per cent.

The recent Central Bank Monetary Policy Report (MPR) for December 2024 gave figures to suggest almost US$2.2 billion in forex had been used by way of credit cards.

Under the heading of forex market developments, the 2024 MPR said, "Sales of foreign exchange by authorised dealers to the public reached US$4,927.4 million over January-October 2024, a decrease of 5.7 per cent relative to the same period a year prior.

"Based on reported data for transactions over US$20,000, credit cards (43.7 per cent), energy companies (17.1 per cent), retail and distribution (15.8 per cent), and automobile companies (5.3 per cent) made up the bulk of foreign exchange sales by authorised dealers to the public."

Newsday's calculation of the 2024 credit card allocation of 43.7 per cent of US$4,927.4 suggests US$2.153 billion allocated in forex for payments via credit card.

Last year, the 2023 MPR said authorised dealers sold US$5.701 billion in forex, including 40 per cent for payments made using credit cards, which calculations put at US$2.281 billion.

The 2022 MPR said forex sales to the public amounted to US$5,973.5, of which payments via credit cards were 31.5 per cent, amounting to a calculated amount of US$1.882 billion.

Calculations for five years ago – based on the 2019 MPR – suggest some US$1.395 billion in payments made via credit card, based on US$5.016.6 billion in forex sold inclusive of 27.8 per cent for credit card payments.

In November, at least one business chamber leader criticised Imbert's remarks, saying business owners were forced to rely on credit cards to get forex to buy basic imports of raw materials and goods.

Saying credit-card use was a necessity just to keep their ventures operating, he said many small business people had to borrow credit cards from friends or family members and repay them at heavy rates of interest, increasing their cost of doing business and reducing their profits.