The International Monetary Fund (IMF) has opined that the exchange control in Trinidad and Tobago is not in keeping with the Fund’s agreement on a liberated economy and only protectionist methods are used by countries that are having economic problems, etc.
The Finance Minister is shouting from the rooftop of the Finance Ministry, seemingly being advised by the same archaic bureaucrats responsible for the demise of the islands of Trinidad and Tobago.
Their archaic methods of budgetary and policies leave a lot to be desired. The seeming lack of innovative thought and processes, that are lost somewhere in the archives of time, results in destruction of the economy, but they continue.
The Finance Minister has stated removing the exchange control restrictions; in fact, repealing the Exchange Control Act will bring devaluation, hardships, etc. But he has not said how or why. It is easy to be paranoid and suggest the removal of stupid restrictions will result in hardship and other negative things if your mind is so entrenched in paranoia.
My simple take is:
1. Removing the exchange control will result in increased supply due to the ability to bring in money and securely bank the US dollars without being subjected to criminalisation.
2. The ability to use the US dollar as well as TT dollar will augur well with both supply and demand.
3. The demand placed on the banks will decrease as the international currency will be readily available.
4. Supply increase: demand drops, and cost of item stabilises and remains the same or drops.
Mr Imbert’s stance on protectionism and control is like a father who places his children in a bedroom while the kitchen is burning, and hopes the fire will not reach the bedroom—rather than taking active action of a fire extinguisher to put out the fire.
The restriction of forex with the archaic Exchange Control Act results in a highly functioning black market and a hoarding of currency abroad instead of local banks due to the law, thus resulting in decreased supply in the economy.
Another example Mr Imbert also likens himself to is that of a father whose salary is minimal yet refuses to let the children work to increase the money in the household, but gives them a small stipend to exist, which results in a lower income for the household.
Like the paranoia of this Government which we saw in Covid-19 regulations that destroyed this country’s economy with their lockdown and archaic methods, they thought “bodies in the street” would occur because that is what was promoted by the Government.
In a similar way they are dealing with the exchange control restrictions, because their paranoia feels that by removing the restrictions there will be mass devaluation, etc. But take the example of Barbados. “It ent happen there.”
Are we ruled by paranoia? Question.
Dr Fuad Khan
former MP; former minister