Economists: Upcoming conversations on forex just a start 

ECONOMIST DR Marlene Attzs says the upcoming conversations between the banking community, the newly-minted minister of finance Vishnu Dhanpaul and the Prime Minister will be the first of several conversations that can be had to deal with the challenges with accessing foreign exchange (forex).

Stuart Young on March 20 said he intended to meet with the Bankers Association of TT (BATT) and the Central Bank to discuss the forex issue.

Speaking to Newsday on March 21, Attzs said the meeting may be for the Young and Dhanpaul to get the perspective of the banking community and identify challenges and opportunities.

“I don’t want to pre-empt the Prime Minister but what I think he is doing is meeting with stakeholders because he now has a different responsibility,” Attzs said.

“While he would have known the conversations taking place before, he would have been aware of those conversations as a member of cabinet and the Minister of Energy, but now he is wearing the hat as leader of the government business. I think he is meeting with stakeholders in that capacity to begin conversations.

“It's really having the requisite conversations to start to work towards finding a sustainable solution. But I just see this as a start. I don't see this as an outcome, you know, at the end of a process.”

Economist Dr Vaalmiki Arjoon said inadequate forex access has constrained business operations and stifled SME growth for years, fuelling an atmosphere of uncertainty and threatening sustainable development.

Both economists said forex challenges in TT originate from a reduced supply, stemming from a reduction in energy production which make up the majority of export revenue.

“Forex inflows primarily come from exports and 80 per cent of our exports are from energy. In the last decade, oil and gas production has fallen by 38 per cent while LNG declined by 40 per cent, significantly reducing export earnings,” Arjoon said.

“The decline meant less forex inflows into the economy and given our significant appetite for forex, demand exceeds supply.”

Attzs said TT has multiple uses for its forex including servicing public debt, which has to be paid in US; demands from the business community, including the manufacturing sector; and the energy sector as well as consumables that would also have to be imported.

Arjoon said in recent years the demand for forex has increased as local businesses had to cope with higher prices from suppliers and increases in shipping costs. He added that upcoming US tariffs will also add to the issue as prices from US suppliers could increase, making the demand for forex even greater.

“Banks have an obligation to maximise wealth for their stakeholders. Forex is limited and therefore it will be used not just as a currency to be sold but in a manner to generate more wealth.”

But Arjoon said the treating with the inequity is only part of the solution.

“. . . the key solution lies in increasing our export earnings, not only through higher natural gas production but also expanding the export market share of the non-energy producers.”

Attzs said the conversations may be a start of what could be a reconfiguration of how TT deals with foreign exchange.

“It could be a chance to look at the various demands on the foreign exchange we have in the country and rebalancing that in a very purposeful and systematic way.”