FOREIGN EXCHANGE INJECTION

This would result in a massive increase in the country’s foreign currency reserves position. Instead, in the absence of such legislation the money can be and is all too often paid overseas and as a general rule only the money required for taxes, salaries and other expenses is repatriated to Trinidad and Tobago. Ironically, even some of the State-owned companies are, reportedly, keeping the burden of their export earnings overseas and transmitting to Trinidad and Tobago corporation taxes, inter alia.

While we wish to emphasise that there is nothing inappropriate in the bulk of the export earnings of companies remaining in the countries to which the products are shipped and/or where the companies or their head offices are registered, there is, nonetheless need for legislation requiring otherwise.

The results of such legislation will impact, positively, not only on the country’s foreign reserves position, but will lead, undoubtedly, to a strengthening of the Trinidad and Tobago dollar which has had to be readjusted downward recently to TT$6.32 to the United States dollar.

Recent problems in the availability of foreign exchange to pay for imported goods and services because of the unusually heavy demand provoked, among other things by the great degree of construction activity, resulted in the admittedly modest slide of the Trinidad and Tobago dollar to which we have referred. Ipso facto, a massive inflow of foreign currency earnings that is not adversely affected by outflows to pay for imports and foreign travel, should lead to a meaningful appreciation of the TT dollar.

But there are advantages as well as disadvantages to this. Should this take place, an appreciable strengthening of the country’s currency would mean that the cost of the country’s imports and consequently, cost of living would go down.

At the present time a substantial portion of Trinidad and Tobago’s inflation is imported. And since a great deal of our food and construction material are imported, then grocery bills and the cost of housing and housing repairs, for instance, also will be effectively increased.

We ask the question: Is this the reason why Government prefers not to require foreign companies, operating in Trinidad and Tobago, to have all of their export earnings remitted to Trinidad and Tobago?

If this is so, then commercial banks in times of unusually heavy imports may continue to need to have injections of relatively large sums of US dollars by the Central Bank to deal with shortfalls.