Home' Trinidad and Tobago Guardian : March 30th 2017 Contents MARCH 30 • 2017 guardian.co.tt BUSINESS GUARDIAN
NEWS | BG5
Former Finance Minister and
Governor of the Central Bank
Winston Dookeran is suggest-
ing that the Government allow
the dollar to free float to at least
$8 to US$1 and not devalue as
has been recommended in some
quarters saying "devaluation is
a shock therapy".
The current "so-called float" he
said, is "working under stress; there
needs to be far more flexibility."
Speaking to the Business Guardi-
an in the wake of growing concerns
from the business community about
the foreign exchange shortage in the
country, Dookeran said the time has
also come for the Finance Minister
Colm Imbert to call in bankers and
the energy sector and seek their as-
sistance in boosting the country's
Dookeran recalled having a simi-
lar foreign exchange problem when
he was governor of T&T's Central
Bank. At that time, he said: "I called
in the banks and told them I want
them to find the money for me. We
had weekly meetings."
He said Ronald Harford and Peter
July were there and they "sat down
and started to design the ways and
means to increase the flow. You
have to use moral suasion."
It is advice Dookeran hopes the
Finance Minister will take, suggest-
ing that he calls in both the banking
sector and the energy sector "and
tell them you need one year of addi-
tional foreign exchange. Ask them
to help you."
Dookeran said the Government
also needs "to stimulate economic
growth. They created a problem by
not pursuing investments. Borrow
and invest, let the regime free float.
There will be some adjustment,
prices will increase, but the adjust-
ment will be borne by everybody,"
But he is cautioning the minis-
ter against returning the country
to pre-1993 days when exchange
controls existed. That system, Doo-
keran said, was abandoned by then
finance minister Wendell Mottley
and replaced my a managed flota-
tion "and that has served us well"
but to go back to a system that sti-
fles the economy, he said would be
Dookeran was speaking in re-
sponse to Imbert's suggestion a
week ago that he was thinking
about giving priority to the manu-
facturing sector in the face of scarce
It's a position which the TT
Chamber has also expressed con-
cern about saying it virtually means
returning to a situation of foreign
Dookeran describes Imbert's
proposal as "disguised exchange
control" and he cautioned that
such a move has the potential to
If Imbert's proposal was imple-
mented, manufacturers would get
the foreign exchange they need
while everyone else will fall in the
queue which could result in the
"collapse of the distribution sec-
Hosein: peg at $8
Senior lecturer in the Department
of Economics at the St Augustine
campus of the University of the
West Indies Dr Roger Hosein agreed
that the country needed to bite the
bullet like we did in the 1980's and
take some hard decisions.
Hosein said: "We are in a bad
situation as we have become ac-
customed to foreign goods and ser-
vices. I would peg the currency at
TT$8 to US$1, and start the process
of realignment and recalibrating the
It is, he said, "One of the main
mechanisms to initiate change."
Hosein said it is clear that the
"incremental devaluation which
we experienced in the last year was
not enough," and did not impact the
current account balance.
Now, he said, is the time to "re-
calibrate the economy."
While he admits there would be
some pain, he said ways have to be
found to minimise it. He recalled
that when structural adjustment
measures were taken in the 1980s
there was some "pain but what
happened after we made struc-
tural adjustment changes? Eco-
nomic growth was positive and the
economy moved back into a state
Liaquat Ali: $6.78
fuelling black market
President of the Couva Point Li-
sas Chamber of Industry and Com-
merce Liaquat Ali agrees there is
need for a free float of the dollar.
He said the current float which
fluctuates around TT$6.78 to US$1
"is not a true reflection of the dol-
lar and has fuelled a black market
demand. A free float might help."
Right now he said the business
community is "in dire straits be-
cause we can't get US dollars so
we cannot buy products. This has
resulted in some businesses having
to downsize, others have cut down
on the range of goods."
While he "has no problem" with
the minister's suggestion to give
priority to manufacturers, "it may
not be the best solution."
Ali said: "Some industries do
generate foreign exchange but not
all of them are net earners of foreign
exchange. Some use more foreign
exchange than they earn."
The minister, he said, would have
to do a proper analysis because "the
system must be fair."
But the problem of foreign ex-
change shortage, he said, must be
dealt with. He is suggesting that
the time may have come for "gov-
ernments in the Caribbean to sit
together and discuss whether the
TT dollar can be used to trade in the
region, or come up with a Caricom
note similar to the EC dollar."
Admitting that the suggestion
needs some thought on how it
would work, Ali said that given that
the problem is not unique to Trini-
dad and Tobago "it comes down to
us talking and finding a workable
Economist Dr Roger Hosein
Former Finance Minister Winston Dookeran.
'Fixed' floating rate not working
Economists, chamber head agree...
President of the Couva Point Lisas Chamber Liaquat Ali
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