The Central Bank is well equipped to respond to any foreign currency shortages, Vice President and General Secretary of the People’s Progressive Party, Bharrat Jagdeo, said on Thursday, pointing to a surge in demand.
“I made it clear that the Central Bank has the capacity to intervene in the market when necessary,” Dr Jagdeo told reporters at his weekly press conference at Freedom House.
Guyana’s foreign exchange market has evolved significantly over the past five years, with demand driven by rising imports and growing Foreign Direct Investments (FDIs).
Total imports were valued at $2.2 billion in 2020 and are projected to reach $9 billion by the end of 2025. Despite the increasing demand, the Bank of Guyana has sufficient resources to maintain stability.
At the end of 2024, Guyana’s import cover stood at 8.1 months, based on Total Net Foreign Sector Assets and Reserves (TNFSAR), according to a paper by financial analyst Joel Bhagwandin. Import cover reflects how long a country can continue importing goods and services using its current foreign exchange reserves.
Dr Jagdeo also cited the spillover effects from a foreign currency shortage in neighbouring Trinidad and Tobago. A recent publication from that country’s Chamber of Industry and Commerce showed 62 per cent of businesses faced significant delays in paying suppliers, and nearly 60 per cent reported reduced profitability due to the shortage.
“In Trinidad, it’s practically impossible to get foreign currency…we believe that some of the invoices submitted by companies are inflated…so that when the payment goes to their suppliers, it is for goods that would go into Trinidad and Tobago,” Dr Jagdeo said.
He added that some Guyanese businesses are profiting from the situation by reselling US dollars to Trinidadian buyers at a profit.
“You have some local companies now that are capitalizing on the [shortage]. So, they buy from the banks and the cambios at maybe [GYD 216 for $1 USD] and they are selling to the Trinidadians…they are making money on the side,” he said.
The influx of FDIs, particularly from international hotel chains and other multinational firms establishing operations in Guyana, is also placing additional pressure on the foreign exchange system.
To ease immediate pressures, the Bank of Guyana injected US$100 million into the market in April. The move was intended to meet pending demand and smooth out temporary mismatches in supply and demand.
Dr Jagdeo said the government continues to work closely with commercial banks and private sector stakeholders to monitor and respond to evolving challenges in the market.
