Economist Dr. Indera Sagewan says it's time for citizens to rethink their purchasing habits as the country grapples with a persistent foreign exchange shortage. She warns that while some have again suggested devaluing the Trinidad and Tobago dollar, such a move would only drive up costs, squeeze households and small businesses, and do more harm than good.
00:00Economist Dr. Indira Sajjwan says it's time for the country to face reality.
00:06People cannot keep demanding luxuries like 85-inch televisions while struggling to pay
00:12their bills.
00:14She argues that this means rethinking their consumption, tackling the US $1 billion food
00:20import bill and using smart policy to shift demand toward local production instead of
00:26costly imports.
00:29The government of the central bank also talked about the fact that, and I thought this was
00:32quite interesting, an interesting perspective, that even though we have a significant shortage
00:37in Trinidad, when you compare the volume of foreign exchange we have coming in annually
00:43compared to any one of our neighboring islands, it is significantly higher.
00:47And the problem really resides in how we're using our foreign exchange.
00:52She says the small man would be the most impacted by a devaluation.
00:58Much of what is in the food basket of the lower-income persons, it's in all our food baskets, but
01:03particularly in the lower-income basket is going to be so negatively impacted.
01:09rice, flour, beans, sugar, salt, all of these things that make up the majority of the food basket, of those who can least afford it.
01:21It's going to be hit by higher prices if we devalu.
01:24Dr. Sajiwan tells the morning edition that while economic theory may present devaluation as a solution, the reality is far more complex.
01:34She explains one cannot simply align the official Forex REIT with the black market and expect everything to work out.
01:42So whereas right now the black market is about $8, if we move, as the businessman suggested, to I think 9 to 1, he's suggesting, our black market could probably go to about 11 to 1.
01:55And it doesn't change how much you will be able to get any bank or any of those things.
02:01It doesn't change the need and the requirement of small businesses, for example.
02:05It will render our manufacturing sector very much uncompetitive, and especially when you add the additional 15% in import duties that the American economy has slapped onto us, and that's one of our largest markets.
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