DAVENDRANATH TANCOO, Oropouche West MP, claimed governmental ineptitude led to Republic Bank to recently halve its foreign exchange (forex) allowance to credit-card holders, speaking at a UNC briefing at the Opposition Leader’s office in Port of Spain on Sunday. He called for urgent explanations, while wondering why the Prime Minister had recently said the Government’s Spotlight on the Economy public consultation would be held in the future rather than before this year’s national budget debate as usually done.
Tancoo said the Government’s alleged failures including the stalled Dragon Field gas deal with Venezuela had led to them refinance an old debt by a new US$560 million ($3.9 billion) bond at a worse interest rate, likely leading Republic Bank to tighten its foreign exchange allowance on credit cards.
Saying people feared the upcoming budget, he said the PNM had wrecked the GATE, scholarship and laptop programmes.
“I don’t think there is anything left for the PNM to take away from our children, but if there is anyone who could find something to take away, it is Colm Imbert!”
Regarding Republic Bank’s cut from US$10,000 per cycle to US$5,000, he said it blamed past cuts on “the ongoing challenge with foreign exchange availability.”
He said things had worsened in two years. “Under this Government we have lost $4.2 billion in foreign exchange reserves over the last eight years.”
Many SMEs had suffered to get actual foreign exchange and so had resorted to using their credit cards although this new limit will now cripple many.
Tancoo recalled existing business woes of accessing VAT refunds, rampant crime, higher transport costs, property tax and impending higher electricity rates.
“Parents with children studying abroad, persons going abroad for medical reasons, distance-learning students who are based in TT and enrolled in programmes from foreign universities are also going to be penalised by this slash in foreign exchange availability.”
He said the measure will hit SMEs, jobs and tax revenue; promote a foreign exchange black market; and pass on higher business costs to consumers.
“Republic Bank’s action is a direct result of foreign exchange shortage.
“This Government has failed to attract a sustained inflow of foreign investment to TT.”
Tancoo said the Government has borrowed more money than any other TT government, yet done nothing to generate foreign exchange to pay these debts.
“They are borrowing more money to pay back the money they borrowed. And they are boasting about it.”
Tancoo rejected Finance Minister Colm Imbert’s view of TT’s bond over-subscription as “successful” and a sign of confidence in the TT economy.
He said Imbert just borrowed US$560 million at 5.9 per cent to pay an existing bond of US$550 million at 4.37 per cent interest due for repayment next year.
“Investors would gladly take the opportunity for higher returns but these excesses will be paid off the backs of taxpayers.
“Paying more in interest than you need to is nothing to celebrate.”
The Government would have paid a lower rate if the bond was for 15-25 years, not ten years, he said.
“This is an expensive refinancing of a loan. Recycled debt at higher cost to taxpayers is nothing to boast about.”
He said this refinancing added nothing to TT’s productive capacity – investment, foreign exchange generation, employment – but just added extra debt.
“I would not be surprised if the Minister’s preference to refinance such a half a billion US dollar debt and at higher rates, was a contributing factor to Republic Bank’s decision to cut access to US via their credit cards.”
He said the refinancing news came just after the Prime Minister’s description of his Dragon gas deal as “a huge diplomatic boulder” being pushed uphill.
He blamed an 18 per cent drop in foreign exchange sold by energy companies onto the local market on TT’s energy sector becoming unattractive for them.
“For the last six years the Prime Minister misled and gave false hope to this country that this Dragon gas deal would provide a supply of gas. They held out Dragon Gas to the population as an absolute solution, the magic pill for this country’s economic collapse.
“They did nothing to grow the economy because they pegged this country’s future on Dragon gas and now even after six years of failure to achieve a single cubic inch of Dragon gas the Prime Minister and his minions are still selling this country dreams that magically next year gas will come. It’s not gas that is coming – it’s gaslighting!”
Tancoo feared a gas shortage with no plan nor new source of gas.
“This means that very soon the downstream sector of Point Lisas will face a massive exodus when companies cannot get gas. This means jobs, forex, revenue and economic growth will be reduced.
“Is this what prompted Republic Bank to take the decision announced hours after, to make foreign exchange access more difficult?”
Asking why Dr Rowley promised the Spotlight on the Economy in the future, Tancoo said the budget was the perfect time for it.
“Why wait until after? What are they hiding?”
He said under this Government’s tenure, the Central Bank sold US$12 billion in foreign exchange to “authorised dealers” including US$837 million this year, but the question was to whom. Recalling the firing of former governor Jwala Rambarran after disclosing the biggest recipients of foreign exchange, Tancoo urged new legislation so the recipients would be publicly known.
“The lack of transparency in foreign exchange allocation has been used by this Government to promote specific business interests at the expense of others.”
Small vendors – Shobha selling clothing in a small booth, Ruby selling underwear at the market, or Bobby selling shoes on the Chaguanas streets, cannot get foreign exchange but conglomerates can, Tancoo lamented.
“These are the persons who will be most severely affected by this cut in the credit card limit and for them it is the result will be catastrophic. It is time to right this wrong.”