PORT OF SPAIN, Trinidad, CMC – Finance Minister Colm Imbert says the recommendation by the International Monetary Fund (IMF) for the Trinidad and Tobago government to float the local currency is “not new,” reiterating that the Keith Rowley government “has consistently stated since 2015 that it maintains our fixed exchange rate to control inflation, which is now almost the lowest in the world”.
Over the weekend, the Sunday Guardian newspaper said in a “comment shared exclusively with Guardian Media last Friday, the IMF said Trinidad and Tobago’s foreign exchange restrictions are inconsistent with the fund’s Articles of Agreement. The IMF comment follows heightened concerns about forex supply constraints.
“However, the IMF spokesperson said the fund has followed a cooperative approach, preferring to encourage members to eliminate these measures, including through surveillance and technical assistance,” the paper said.
But in a lengthy response, Imbert said that he had taken note of the commentary in the mainstream media over the last two weeks regarding the availability of foreign exchange (forex), the policy for distribution of foreign exchange, the exchange rate of the Trinidad and Tobago dollar to the US dollar and the question of floating or devaluing the dollar.
He said that the media commentary, recommendations, and demands could be summarised as the Government allowing the local currency to be devalued “ because the IMF says so” and that the Government should get involved directly in the distribution of foreign exchange and not leave it up to the commercial banks or the Central Bank “to address a perception of unfair distribution of forex.”
He said there is also the belief that the Government should yield to pressure from business people and the Express newspaper and resume the forex window at the EximBank for essential imports.
“However, the reality is that the IMF’s recommendation that the Trinidad and Tobago government should allow the TT dollar to float, which would result in an immediate devaluation of the TT Dollar, is not new. This recommendation did not appear for the first time in the 2024 IMF Article IV Report, as the Guardian newspaper would have us believe,” Imbert said.
He said that since 2012, the IMF recommended “greater exchange rate flexibility to allow pricing to play a bigger role in equilibrating the market.”
Imbert said this was repeated in the IMF’s 2013 Article IV Report on Trinidad and Tobago, where the IMF reiterated that “our exchange rate should be allowed to fluctuate within a wider band.”
However, he noted that the People’s Partnership government then told the IMF that they were not contemplating changes to the exchange rate system.
Imbert said that the IMF repeated the recommendation the following year, noting that the foreign exchange allocation system at that time “had led to a widespread and persistent recurrence of foreign exchange shortages.”
Imbert said that since coming to office in 2015, the Rowley administration has consistently maintained the fixed exchange rate to control inflation, “which is now almost the lowest in the world.” It will not impose hardship on the poor and vulnerable by giving into the irrational demands of the Guardian newspaper and other provocateurs that we devalue the dollar.
“All a devaluation will do is cause a massive spike in the cost of living and make everything more expensive. It will not create additional US dollars for the country or make forex more readily available for ordinary citizens.
“By pretending that we are subject to the dictates of the IMF, therefore, and constantly pushing its devaluation agenda for the last nine years, the Guardian is doing the population a disservice,” Imbert said.
He said it is noteworthy that Barbados, which has been in an IMF program for many years and almost ran out of foreign reserves at one point within the last 10 years, has resolutely refused for the last 49 years to float or devalue its dollar.
“The Barbados dollar has been pegged to the US dollar at a rate of BDS$2.00 to US$1.00 since 1975. Further, there are exchange control restrictions in Barbados that do not exist in Trinidad.
“ Instead of wasting time demanding that the Trinidad government devalue the dollar, therefore, the Guardian would be better off trying to figure out how Barbados has managed to keep its dollar fixed for so long and how it has managed to restrict capital flows, despite being in an IMF program.
Imbert said that regarding the demand by the media and specific stakeholders in the business community that the Government get more involved in the distribution of foreign exchange, he said it has already been announced that he will be holding consultations over the next month with various interest groups to determine the best way forward.
“Again, this is not new, and it was based on representation made by the business community that the Government makes forex available in a targeted manner, that the forex windows at the EximBank, which from all accounts are working well, were created four years ago.”
Imbert also dismissed as a “figment of the media’s imagination” the alleged pressure brought to bear on the Government to resume the forex window for essential imports at the EximBank.
“The truth is that the Government signaled months ago to clients of the Eximbank that it was reviewing the list of essential imports and the quantum of foreign exchange made available through that particular forex window, which was created by the Ministry of Finance in 2020.
“ It is noteworthy that the forex windows created at the EximBank, namely the window for export manufacturers and the window for essential imports, are innovations of this Government to ensure better focus, equity, and rationality in the distribution of the Government’s foreign exchange.
“These are not creations of the media, business community, or any previous government. Instead, these are policy instruments of THIS Government and THIS Ministry of Finance designed to facilitate diversification of the economy and to ensure that forex is available for essential items.”
He said that it is “pure fantasy for the media, therefore, to promote its false narrative that the window for essential imports, created by this government four years ago as a long-term solution for equitable and practical access to foreign exchange for items that the country needs, such as basic foods and pharmaceuticals, was resumed merely because of media pressure and the noise made by certain businessmen, who, by their admission, do not participate in the EximBank facility.”
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