Relief is coming soon for businesses, including micro, small and medium enterprises (MSMEs) that have been finding it difficult to access foreign exchange to purchase goods needed for their operations.
Finance Minister Colm Imbert announced yesterday that within the next “couple of weeks” he will be approaching the Cabinet to increase the allocation of foreign exchange to the Export Import Bank of Trinidad and Tobago (EximBank), to allow increased allocations to importers of essential items and to expand the foreign exchange availability to MSMEs.
“We are going to put considerably more money into those special windows at the Eximbank to allow many more of our local businesses to access foreign exchange for productive purposes,” he said as he acknowledged the rising cost of goods and shipping caused by the Covid-19 pandemic and the Russia-Ukraine war.
He said the Eximbank system has been working “very, very well” over the years.
Imbert pointed out that providing additional foreign exchange to the Eximbank for specific purposes, aimed at sustaining the country’s livelihood and boosting exports, was a far more useful approach than trying to tell commercial banks who they should give foreign exchange to and how much foreign exchange they should give.
He said the Government also expects that there would be improvement to the availability of foreign exchange to the commercial sector from the energy sector, given the outlook for oil and gas production.
Imbert was at the time responding to a motion raised by Independent Senator Amrita Deonarine in the Senate.
The motion, which raised concerns over the difficulty MSMEs and the public face accessing foreign exchange, called on the Government to “table in Parliament, within the next six months, a comprehensive frame that will guide key stakeholders, including MSMEs, the Central Bank of Trinidad and Tobago and commercial banks on how the Government intends to navigate the tightness in the foreign exchange market to overcome downside risks in the medium to long-term”.
Deonarine said after looking at a Joint Select Committee meeting in November 2021, which enquired into the impact of Covid-19 on the MSME sector, she did her own investigations into the challenges faced by MSMEs.
She said she spoke to several business chambers who confirmed that trying to get foreign exchange through commercial banks was difficult.
Deonarine said she, too, found it difficult to access US currency for business purposes.
“You have one commercial bank giving you US$300 a day. In order to access that, you have to call the bank every morning and hope someone answers quickly and gets the approval to purchase. So you have to go through a process of accumulating increments of foreign exchange until you make up enough to make a purchase for raw materials or replenish stocks for your business,” she lamented.
She said one financial institution indicated that it could no longer provide US currency and suggested that she take a loan to access it.
Deonarie said at present, larger and more established businesses were favourably positioned to get preference from financial institutions for foreign exchange purchases as they “give the banks a lot of business”.
She said it appeared that commercial banks were making their own rules on allocation of scarce foreign exchange and MSMEs who are not established appeared to be penalised by not being able to access foreign exchange.
“I think this borders on unethical business practice…” Deonarine said.
She also noted that parents with children studying abroad were in the same predicament as MSMEs.
Stressing that the existing foreign exchange distribution system could not continue, Deonarine called on Government to set clear guidelines, in conjunction with the Central Bank with respect to the availability of foreign currency for MSMEs and tertiary level students studying abroad.