The T&T dollar will not be devalued since doing so will not make more foreign exchange available in the nation. “All a devaluation will do is cause a massive spike in the cost of living and make everything more expensive,” stated Finance Minister Colm Imbert.
Imbert said in a press statement that he had observed the previous two weeks of discussion on (1) the foreign exchange availability, (2) the foreign exchange distribution strategy, and (3) the T&T dollar exchange rate.
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Economists, industry associations, and commentators have all pointed out the persistent scarcity of the US dollar and the challenges it presents.
He stated, “reality is that the (International Monetary Fund’s) recommendation that the T&T Government should allow the T&T dollar to float, which would result in an immediate devaluation of the T&T dollar, is not new”.
He continued, “As far back as 2012, the IMF recommended ‘greater exchange rate flexibility to allow pricing to play a bigger role in equilibrating the market’. This was repeated in the IMF’s 2013 Article IV Report on Trinidad and Tobago, where the IMF reiterated its view that ‘our exchange rate should be allowed to fluctuate within a wider band’.”
“However, the then UNC Government told the IMF that they were not contemplating changes to the exchange rate system at that time. Again in 2014, the IMF told the then UNC Government that the foreign exchange allocation system existing at that time ‘had led to an apparently widespread and persistent recurrence of foreign exchange shortages’. However, the then UNC Government did not agree to the IMF’s recommendation that our dollar be allowed to float,” Imbert further noted.
He emphasized that the current PNM government has repeatedly declared since 2015 that it will not place “hardship on the poor and vulnerable” by depreciating the T&T dollar and that it will keep the exchange rate constant in order to manage inflation, which is now among the lowest in the world.
Notably, he said, Barbados, “which has been in an IMF program for many years, and at one time within the last ten years almost ran out of foreign reserves, has resolutely refused for the last 49 years to float or devalue its dollar.
The minister further noted, “The fact is that the Barbados dollar has been pegged to the US dollar at a rate of BB$2 to US$ 1 since 1975. Further, there are exchange control restrictions in Barbados that do not exist in Trinidad.”
He recommended that, despite being part of an IMF program, emphasis be given to Barbados’ ability to limit capital movements and maintain a steady currency for such a long time.
As previously mentioned, he will engage with a number of interest groups over the course of the next month to decide the appropriate course of action regarding the distribution of foreign exchange to the business sector.
“Again, this is not new, and it was based on representation made by the business community that the Government makes forex available in a targeted manner, that the forex windows at the EximBank, which from all accounts are working well, were created four years ago.”
According to Imbert, the Ministry of Finance established that specific forex window in 2020, and months ago, the government informed EximBank customers that it was re-evaluating the list of necessary imports and the amount of foreign cash available via it.
According to him, the current government has innovated the forex windows for export producers and critical imports at Eximbank to guarantee more focus, equality, and logic in the allocation of the government’s foreign money.
He continued, “The essential imports facility has worked well for the last four years but it needed restructuring because there is no longer any need for preferential access to forex for the importation of items such as face masks, respirators, and hand sanitizers.”
