Farrell warns Govt on informal Forex controls

Giving his comments during an armchair discussion at the first instalment of the Chamber of Commerce’s Economic Transformation Series, “Is Oil and Gas Smothering the Private Sector in Trinidad and Tobago?”, Farrell agreed with Ronald Hinds, chamber president, that the institution of what appeared to be informal controls in distributing forex was a “slippery slope.” Farrell, who identified himself as a director of Republic Bank, said banks were responsible for selling foreign exchange to the public, while the Central Bank’s job was to disburse that foreign exchange to the market. He pointed out that the Minister of Finance was telling the Central Bank to tell the commercial banks they must prioritise manufacturers.

“What is a banker to do? “Corruption is going to enter into that. I have told my colleagues at Republic Bank precisely that. The Bankers Association of this country should have told the Central Bank, told the Ministry of Finance, ‘We are not prepared to do exchange controls for you.’ But they have not said that. And they are going to get themselves in a lot of trouble, the bankers are going to get themselves in a lot of trouble. Because customers are going to say, ‘You are favouring that one,’ and it is going to open us up to a royal mess.” Farrell said the float system put in place in 1993 was more than enough to manage forex without exchange controls.

“What we are doing now is re-introducing exchange controls. They do not work. They cause corruption, they cause problems.” On Wednesday, the finance minister presented the mid-year budget review, in which he reiterated government’s stance that priority was to be given to manufacturers to access US dollars.