DOMA: Less Gov't control of foreign exchange distribution needed, not more

Thursday, January 11, 2018 - 13:30

The Downtown Owners and Merchants Association (DOMA) says there is a need for less control of foreign exchange distribution, and not more.

The comments comes as DOMA says it has taken note of remarks made by the Finance Minister suggesting the need for more control.

DOMA issued the following statement on Thursday;

"We note with some apprehension remarks attributed to the Honorable Minister of Finance that government may soon have to exert greater control of foreign exchange distribution.  
We wish to state for the record that we have, in the past, concurred with the view of the former chairman of the Economic Advisory Board that there is need for less control of foreign exchange distribution instead of more control. 
We are also concerned about remarks attributed to some stakeholders who seem to feel that they should receive preference in foreign exchange distribution because they earn foreign exchange – the opposing view that has  been widely expressed is that such earners of foreign exchange should be assisting the market with supply instead of asking for preferential allocation.

How do these stakeholders propose that the market sustain important industries that need raw materials to stimulate construction, support fashion, upholstering  and school uniform production, supply spare parts for maintenance of the nation’s rolling stock, provide supplies for the hotel and tourism business etc. Who will arbitrate these market needs better than the market itself? 
It is tragically predictable that the current mechanism of foreign exchange management with a fixed exchange rate as it’s main feature is going to lead to a loss of confidence in the TT dollar and a shortage of availability as more and more holders of foreign exchange seek a more realistic value for their hard currency assets.

Not only does the current model of foreign exchange management fail in its attempt to allocate according to market forces, but it is also fueling a loss of confidence in the TT dollar with a requisite loss of confidence in the TT economy. This latter loss of confidence has a nasty sting in the tail which will manifest itself in lack of economic activity with unemployment to follow.  
We sympathize with the Government’s fear of inflation and increases in the cost of living but this must be viewed in the context that current shortages in currency are already placing upward pressure on prices of key commodities. The fear of an increased Cost of Living also needs to be balanced against the prospect of rising unemployment.

We do not advocate drastic adjustments but we are irrevocably determined in our view that managed adjustments are needed.
Those holding high office should consider listening to alternative arguments to the exchange allocation policy in use at this time. There is abundant evidence, some of it nearby, that the current model will create an economic predicament that will have dire consequences in the not too distant future."