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  • 1 year ago
Economist Dr. Indera Sagewan is with us virtually, weighing in on the Finance Minister's latest pronouncements on our forex situation.
Transcript
00:00Well, Economist Dr Indira Sejewan is with us tonight, virtually, weighing in on the
00:05Finance Minister's latest pronouncements on our forex situation.
00:09Dr Sejewan, good evening and thank you for joining us.
00:22Unfortunately we are having some audio issues with Dr Sejewan.
00:25Hi, I'm here.
00:27Okay, great.
00:28I think my mic is on.
00:29Okay, I'm happy we got on to you.
00:30Well, thank you for joining us.
00:33The Minister has pointed out that the distribution of foreign exchange locally has been based
00:38on an honest system that has been in place for the past 25 years, that the government
00:43will be seeking the input of local business chambers and various other interest groups
00:48about whether the time has come for a more structured format.
00:52Do you see any advantage or any light at the end of the tunnel via this approach?
00:58It's a short-term fix.
01:00That is all it can be.
01:02The bottom line is the national conversation has been dominated by the issue of a foreign
01:07exchange crisis because that is what is upon us.
01:10Our major export, the energy sector, is declining significantly and the earning from that sector
01:16is contracting.
01:17And our non-energy sector is not taking up the slack in terms of its capacity to earn
01:23foreign exchange.
01:24So in this present moment, the country is facing a foreign exchange crisis.
01:28We were not facing it when we had a boom period with respect to oil, with respect to gas.
01:34But right now there is a crisis.
01:36And because there is this crisis, there is justification for intervention of sorts.
01:41So what the Minister is talking about in terms of developing some kind of a regulatory system
01:48that will seek to prioritize the allocation of our very scarce foreign exchange is what
01:54is needed in this moment.
01:56And it is needed in this moment because we can't snap a finger and simply have additional
02:01sources of foreign exchange.
02:04Now I say that, and in the next breath I say we should not be in this place today because
02:09in this particular administration has been in power for the last nine years.
02:14And the issue of economic diversification keeps coming up.
02:17It keeps being articulated in policy documents and national budgets year after year.
02:22But we have not really done anything meaningful in terms of diversifying our sources of foreign
02:28exchange earning, while on the other hand the demand for foreign exchange continues
02:33to increase.
02:34I mean, our food and port bill alone has moved within the last few years from $5 billion
02:38to now over from $5 billion to over $7 billion, which is over $1 billion U.S.
02:47Now within that food category, maybe as a country, we need to take a look and we need
02:51to see, we need to prioritize where that foreign exchange is allocated.
02:56Maybe we need to define what are more luxury food items and say, listen, we need to in
03:00this moment not allow our foreign exchange to be used there, but just really to be used
03:05on the basics.
03:06Now this also affects business.
03:09There is no solution that's a good solution in this moment, unfortunately, because any
03:15decision that is made is going to affect businesses, whether it is businesses that are purely users
03:20of foreign exchange, but generators of jobs, of taxes, et cetera, and if they can't get
03:26access to foreign exchange, they may have to downsize or close their businesses.
03:30So any solution...
03:31So either way the economy will be hit.
03:35So do you think...
03:36Yes, any which way the economy is going to be hit.
03:38So do you think the expected talks with the multinationals on paying taxes and U.S. dollars
03:43would yield the desired results?
03:46I don't know that it will.
03:47I mean, the minister mentioned it in his budget, but in this moment, again, the minister has
03:52to make whatever effort he can in the short term to bring in a foreign exchange, and that
03:57would be one of the shortest mechanism by which he can bring foreign exchange, because
04:01these taxes will be going right now in this moment.
04:05So if he can get that in U.S. currency then, in foreign currency then, that obviously will
04:10increase the supply, but we have to focus on the long term, and the long term is finding
04:16new sources of foreign exchange, diversifying the economic base of the economy of China
04:21and Tibet.
04:22But by all means, I am happy to hear that the minister is not simply dismissing the
04:27current challenge that the country is facing, and that he is prepared to sit down in a reasoned
04:33manner with key stakeholders, and I want him to note that individuals are also key
04:40stakeholders.
04:41So while he is meeting with the chambers, he must also ensure that he speaks to civil
04:46society, because we too are in that queue, and we too have demand for foreign exchange.
04:52So it is a Herculean task that the Minister of Central Bank faces, but it is where we
04:59are on a solution.
05:01What about putting mechanisms in place to ensure that foreign multinational companies
05:07pay local contractors?
05:11In U.S. dollars.
05:12In U.S. dollars, because that's how they are quoted.
05:16Yes, correct.
05:17They do pay local contractors, but yes, they do pay local contractors, and yes, by all
05:22means, this is a, but again, I don't know that there is a mechanism by which the government
05:28can force that to happen, because the multinational corporation will argue that we are operating
05:35in a country where the sovereign currency is T.T. dollars.
05:38We will actually, Minister, will actually have to appeal to the conscience of these
05:44particular entities in terms of trying to sway them because of where the country finds
05:50itself in order to convince them to do this, and to convince them that it is in their best
05:56interest as well to do this, because again, it redounds to a short-term fix, but that's
06:04where we are now, and we must seek any measures.
06:07Well, thank you very much, Dr. Sejeevan, for joining us tonight to shed some light on this
06:11issue and some clarification as well.
06:14You're very welcome.
06:16Good night.
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