'HONOUR SYSTEM' FOR FOREX. SHOULD THAT CHANGE?

CCNTV6

The Finance Minister says the law does not allow any bank in this country to tell him how much forex they're giving customers.  This, as he revealed on Tuesday that the distribution of foreign exchange locally has been based on "an honour system" that has been in place for the past 25 years.  However, the Finance Minister announced on Tuesday that Government will be seeking the input of local business chambers and various other interest groups about whether the time has come for a more structured format.  Juhel Browne reports.

Transcript

00:00The Minister of Finance does not distribute foreign exchange.

00:03I don't have a pool of foreign exchange in my office, or in this building, or in the Treasury, where

00:10when someone requires foreign exchange, they apply it to the Minister of Finance, or the Pwner Secretary in Finance, or anything like that.

00:17That's not how it's done.

00:18Finance Minister Colm Imbert speaking during a virtual media conference on Tuesday,

00:23following his announcement on Sunday that the Ex-Im Bank Forex window for the importation of essential items

00:29has been resumed after careful review.

00:32When taxes are paid in U.S. dollars,

00:35they go into a special account at the Central Bank, and that constitutes

00:42the country's or the government's foreign reserves, so that that's how we earn U.S. dollars.

00:48The Finance Minister said Trinidad and Tobago also gets U.S. dollars when the government borrows from

00:53institutions such as multilateral

00:56international agencies. He then explained how the Forex distribution system works in an apparent response to the declaration

01:04by the opposition and several local business owners that there is a foreign exchange crisis in Trinidad and Tobago.

01:11Let's say the Central Bank

01:13distributes 100 million U.S. dollars

01:16every two to three weeks to the commercial banks. One may be the largest bank,

01:20maybe the Republic might get 20% of that,

01:24so 20 million, and then FCB might get 15 million,

01:29Scotia might get 17 million. It all depends on the size of the bank, the number of customers it has, the number of branches it has.

01:36It's a formula. On Sunday, Opposition MP Devendranath Thanku

01:41spoke about what he said was the Finance Ministry's response to a letter from the attorney of the owner and founder of

01:48Ramsaram Dairy Products on the distribution of Forex.

01:52What this means is that there is no official policy that deals with the allocation of foreign exchange to businesses and

02:00individuals.

02:01The status quo works for the PNM and their friends, family and financiers at the expense of you

02:09ordinary citizens and genuine businesses in this country. While no mention was made of the opposition on Tuesday,

02:15a question was posed to the Finance Minister about whether he had any proof that the commercial banks are making Forex

02:23available to their preferred customers. Under the Financial Institutions Act,

02:29it would be an offense for a bank to tell me

02:35how much Forex they're giving the customers.

02:38So I'm afraid I'm unable to get that information. I can ask the central bank to look into it.

02:45But even they would not be able to tell me in any

02:49specific way because they'd be breaking the law as well.

02:52The Finance Minister explained that the central bank's regular foreign exchange

02:57intervention gives preference to trade followed by medical expenses and overseas tuition for students studying abroad.

03:05The category that would not receive

03:08any kind of preference at all is if some, for example, somebody wanted to buy a condominium in Mayan, they would hardly ever

03:15get part of that

03:18distribution going into the commercial banks. It's an honor system.

03:21The Finance Minister said the government can, in his words, go to the extreme, which he said it has not done yet in

03:30particularizing whether a percentage of the foreign exchange goes to specific categories.

03:36So we are going to talk to the Chambers of Commerce, the TGMA, and various other interest groups and ask them

03:43whether they believe this honor system that has been

03:46enforced for the last 25 years

03:49should change into a more regulated and a more structured thing,

03:53whereby the central bank would now have categories of

03:58distribution for foreign exchange. The Finance Minister said those talks would include the Tobago Chamber of Commerce and that he expects

04:05he will be able to complete those discussions maybe by the end of this year.

04:10Joel Brown, TV6 News.

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