For months, Trinidadian businesses have complained of a foreign currency shortage in the Twin Island Republic but it is believed that Guyanese purchases are helping to ease those woes.
“That (Guyanese purchases) should serve them better because if we import their goods, then the payments are done in US dollars.
“If it was the other way around, we would’ve had difficulties with our exporters getting paid here,” Vice President Dr. Bharrat Jagdeo explained at a press conference on Thursday.
Indeed, Guyana is a substantial importer of Trinidadian goods. In 2021, based on information from the United Nations COMTRADE database on international trade, Trinidad and Tobago’s export to Guyana amounted to about US$577.2 million.
This means that Trinidad rakes in substantial foreign currency earnings from Guyanese purchases (or, in other words, imports) of products produced in that country.
Multiple reports in Trinidad and Tobago reference a foreign currency shortage in the country. In March, the Daily Express reported that the Central Bank Governor Dr Alvin Hilaire said citizens will have to be prepared to continue facing shortages of foreign exchange for some time to come.
“We all know that we are in a situation now in Trinidad and Tobago, where the market is not clearing, so we do have some access problems. In the short run, I think as a society, we must have a consistent, foreign exchange regime that involves better and equitable access,” Hilaire was quoted as saying.
He also said the situation will persist until the country can achieve market equilibrium based on improved macroeconomic conditions.
The country’s shadow Minister of Finance Davendranath Tancoo, in a press release, also said Trinidad’s foreign exchange inflows “slowed drastically” with the closure of the Petrotrin refinery and the resultant multiple plant closures at Point Lisas
Despite these reports, Trinidadian government officials deny such a shortage exists. In March, the country’s Finance Minister Colm Imbert said the demand for foreign currency outweighs the supply. The country’s High Commissioner to Guyana Conrad Enill also emphasised that there is no shortage of foreign currency but noted that if there were issues in the marketplace, the Central Bank would intervene to normalise access to foreign exchange.
Foreign exchange inflows and Trinidad’s economy, generally, is linked to the country’s dependence on the energy sector which, according to the Inter-American Development Bank (IDB), continues to be an integral source of exports and fiscal revenue.
In 2022, the IDB projected that the economy is projected to recover in 2022 and maintain moderate levels of growth through 2024 since energy prices are expected to continue through 2024.
In a report released last month, the IDB noted that high energy prices indeed supported economic recovery in 2022. Trinidad and Tobago benefited from higher than expected commodity prices in 2022, which supported economic growth.
But there’s another part to Trinidad’s foreign currency problem.
“A couple of (local) companies approached me and said that they were offered by Trinidadian companies to pay for their imports from Guyana in Trinidadian dollars and they (the local companies) didn’t want to be stuck with the (Trinidadian) currency,” Jagdeo disclosed too.
It is believed that this is linked to the foreign currency shortages that private sector players are grappling with in Trinidad and Tobago.
In August, Jagdeo told reporters that the government discovered that Trinidadian businesses operating in Guyana are procuring goods for their businesses from Guyana and shipping them to Trinidad.
In doing so, they are utilising Guyana’s foreign currency to make those payments.
Meanwhile, there are also reports of Trinidadian banks facilitating companies with use of foreign exchange from Guyana through overpricing. Jagdeo expressed hope that Trinidad and Tobago’s Prime Minister Dr. Keith Rowley would look into these issues.