-Not shortage

-by Kristin Josiah

Financial analyst Joel Bhagwandin says Guyana’s foreign currency situation should not be viewed as a shortage, but rather as a liquidity and market issue.

He says strengthening financial market infrastructure, including technology and interbank foreign currency trading, can help address the situation.

He says the focus should now be on strengthening the implementation of those policies and programmes.

Bhagwandin says this includes improving efficiency, quality, risk management and value for money. He also says Guyana’s foreign currency situation should be viewed as a liquidity and market issue, rather than a shortage.

“A foreign currency shortage is determined based upon your reserve. If your national reserve is depleting, then you have a problem. Our national, we have a paradox, and I’ll explain the paradox. And we’re mischaracterizing the issue. It’s not a shortage. So let me explain. It’s a paradox because our national net, national foreign asset is on the rise. It’s not depleting. It’s not declining. It’s on the rise. Then why do we have this problem? What we have is a liquidity problem, not a shortage,” he said.

According to Bhagwandin, improvements are also needed in the country’s financial market infrastructure.

“But when it comes to foreign currency, they don’t do that. So you would find Bank A keeping their surplus for their customers. Bank B is in a deficit they don’t have. So they can’t get from Bank A. They have to wait until the central bank releases that money. So it’s a liquidity issue,” Bhagwandin further explained.

He points to the development of technology and an efficient interbank foreign currency market as areas for attention.

Bhagwandin says continued investment in financial infrastructure and economic diversification will be important. He says faster and more effective implementation will help to strengthen Guyana’s economic resilience.