Tancoo: Forex shortage is the cause of the crisis


Oropouche West MP Davendranath Tancoo – Courtesy TT Parliament

OROPOUCHE West MP Davendranath Tancoo accuses Finance Minister Colm Imbert of playing “word semantics” about the currency shortage.

“The Finance Minister is trying to play semantics with the people when he claims that we do not have a currency crisis but a shortage,” Tancoo said in a media release on Sunday.

“But the facts speak for themselves. Businesses and individuals are still experiencing difficulties securing currency as the economy continues to struggle, SMEs (small and micro enterprises) struggle for survival, while the poverty line stretches to include more citizens daily.”

Tancoo is shadow minister for finance in the opposition.

Referring to assurances given by the finance minister to Jamaican businessmen recently, “told them that Trinidad and Tobago had eight and a half months of import cover, not including US reserves in the Heritage and Stabilization Fund (HSF)”, Tancoo said. was nothing more than a PR exercise.

“He is ignoring the fact that our foreign exchange inflow has slowed down drastically with the closure of the Petrotrin refinery and the consequent multiple factory closures at Point Lisas,” Tancoo said.

He added that while the minister sought the interest of the large business sector, small traders, entrepreneurs and the SMEs, which represented 91 percent of all registered businesses in TT, were suffering.

“The ordinary citizen who requires currency for travel or university tuition fees abroad for their children has to stand in bank lines daily for a maximum of US$200 at a time,” he said.

Tancoo said with the US federal reserve rate increasing eight times – most recently on February 1 – bringing the rate to a range of 4.5 percent to 4.75 percent – the highest since October 2007 – this will affect the overall value of HSF.

“One economist warned that ‘over 75 percent of our HSF is invested in US securities, and the interest rate hikes last year depressed the value of US stocks and bonds, therefore lowering the total HSF value from US$5.58 billion to 4 .77 billion US$ during June 2021 to June 2022.’ This decline in value may be further exacerbated by this latest rate hike,” he said.

Tancoo said the central bank governor, Dr. Alvin Hilaire, had subscribed to this view. Hilaire had noted that “since 2020, a total of US$1,872.6 million was withdrawn from the HSF to fund health and other claims related to the pandemic, and in 2022, two deposits totaling US$345.8 million were made, while the volatility of the international stock markets also affected the value of the fund.”

Tancoo further warned: “With the US interest rates affecting stocks, bonds and other investments around the world, it is reasonable to expect that the local economy will also be adversely affected.

“This means our slow inflow of foreign currency will be further disrupted.”

He wanted the minister to say how he planned to address the shortfall in foreign exchange earnings, especially as US interest rate hikes pushed oil and gas prices to levels below what the national budget predicted.

“Pretending we don’t have a problem is not a credible fiscal strategy, and it is not one that would instill confidence in his competence to manage our economy through the current and impending challenges.”

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