Are we being ruled by paranoia?

THE EDITOR: The IMF has opined that exchange control in TT is not in keeping with the Fund’s agreement on a liberated economy and only protectionist methods are used by countries who are having economic problems, etc.

The finance minister is shouting from the rooftop of the Finance Ministry, seemingly being advised by the same archaic bureaucrats who are responsible for the demise of TT. Their archaic budgetary and policy methods leave a lot to be desired. The seeming lack of innovative thought and processes, that are lost somewhere in the archives of time, result in destruction of the economy, but they continue.

The finance minister has stated that removing the exchange control restrictions, in fact repealing the Exchange Control Act, will result in devaluation, hardships, etc. But he has not said how or why. It is easy to be paranoid and suggest that the removal of stupid restrictions will result in hardships and other negative things if your mind is so entrenched in Paranoia.

My simple take is:

1. Removing the exchange control will result in increased supply due to the ability to bring in money and securely bank the US dollars without being subjected to criminalisation.

2. The ability to use the US dollar as well as TT dollar will augur well with both supply and demand.

3. The demand placed on the banks will decrease as the international currency will be readily available.

4. Supply increase: demand drops and cost of items stabilises and remains the same or drops.

Minister Colm Imbert’s stance on protectionism and control is like a father who places his children in a bedroom while the kitchen is burning and hopes that the fire will not reach the bedroom, rather than taking the active action of a fire extinguisher to out the fire.

The restriction of foreign exchange (forex) with the archaic Exchange Control Act results in a highly functioning black market and a hoarding of currency abroad instead of local banks due to the law, thus resulting in decreased supply in the economy.

Another example that Imbert also likens himself to is that of a father whose salary is minimal yet refuses to let the children work to increase the money in the household, but gives them a small stipend to exist, which results in a lower income for the household.

We witnessed the paranoia of this government with the covid19 regulations that destroyed the country’s economy with its lockdown and archaic methods. It thought that “bodies in the street” would occur because that is what it promoted.

The government people at the top are dealing with the exchange control restrictions in a similar way, because in their paranoia they feel that by removing the restrictions there will be mass devaluation, etc. But take the example of Barbados. “It ent happen there.”

Are we ruled by paranoia?

DR FUAD KHAN

former MP and minister