Govt’s limited focus on non-oil sectors influencing hike in U.S. dollar: Opposition says
Jun 15, 2025
Leader of the Alliance For Change, Nigel Hughes
Kaieteur News – The People’s National Congress Reform (PNCR) and the Alliance For Change (AFC) have called out the Government of Guyana for its limited focus on the country’s non-oil sectors, saying that it is influencing the recent hikes in the United States Dollar.
On Friday, both parties were asked to explain why the US dollar continues to climb and to provide solutions to the problem. The U.S. dollar, according to the Central Bank stands at $210 to GY$1. However, the price across commercial banks stands at US$208 to US$216. At the local Cambios, the exchange rate is as high as US$224 to GY$1.
Economist and advisor to the PNCR Elson Low in an invited comment told Kaieteur News that the consistent upward pressure on the US dollar versus the Guyanese dollar is due to the government’s failure to ensure that there is an adequate supply of foreign currency while simultaneously increasing the local money supply at a rate that is faster that the growth with the non-oil economy.
“This has created a demand and supply imbalance, resulting in shortages of foreign currency and an exchange rate that is often much higher than the Bank of Guyana rate when citizens go to both banks and Cambios. In essence, by increasing the money supply sharply (last year it increased by 25%, according to the Minister for Finance), the government has flooded the local market with Guyana dollars,” Low said.
He stressed that the non-oil foreign currency earners for Guyana have been either stagnated or in decline, with the performance of sugar being far below expectations and the gold sector only growing by 0.5% last year. If the situation is to be remedied, he opined that government must therefore at its minimum efforts meet its productions targets in sugar while combating the smuggling of gold to rebalance the market.
“Failure to address this multi-year shortage has resulted in higher prices for imported goods, prolonging the cost-of-living crisis. It is clear evidence of poor economic management and the Private Sector Commission, GCCI, various large businesses and ordinary Guyanese have been calling for change for some time,” Low said.
He added that, “The government’s sporadic interventions into the market are clearly insufficient, and it is pointless for it to blame Trinidadian businessmen, who the PPP tries to scapegoat to hide its own incompetence. Rather, the government must address the root causes of this crisis and regularly monitor the market to ensure businesses and consumers can readily access foreign currency.”
Meanwhile, the Leader of the AFC Nigel Hughes, told the media that foreign exchange is basically like any other phenomenon in economics, meaning it is a produce of the demand for foreign exchange versus the availability of foreign exchange.
He argued that, “Most of the income that we generate from oil and foreign exchange does not actually come directly back into the economy. It’s actually banked in the federal bank in the United States of America. And from time-to-time, ostensibly, there are transfers from that U.S. account to Guyana.”
Economist and Advisor to the PNCR on oil and gas, Elson Low.
Hughes explained that the current situation in Guyana the pressure for the demand for goods that have to be paid for in foreign currency is pushing the foreign exchange rate up. For example, with the increase in construction, cement is one of the biggest factors. In order to purchase cement, the foreign currency demand at the Central Bank would increase as a direct result of the demand from the commercial banks.
“That’s just one… everything else that goes into construction, about 90% of the products that go into construction have to be imported. So, with all the construction, all the hotel rooms that are being built, all the bridges, all the infrastructure, the roads, etcetera, there’s a huge demand for foreign currency input. Now, if we’re not bringing back a lot of the foreign currency, that is sitting in that bank overseas in United States of America, what is going to happen is the supply of foreign currency in the commercial banks, is a lot less than what is being demanded, and what central bank releases to the commercial banks is not enough to manage that exchange rate,” he told the media.
The politician highlighted that quite often the Central Bank would release increased amounts of foreign currency into the exchange market in hopes to stabilize the currency but the increase in the exchange rate is driven purely by demand of foreign currency and the availability made by the Central Bank to the commercial banks.
“This is not likely to change. Ultimately, the currency ought to be floated right now, it’s actually managed. So, what you actually seeing is not a real reflection of what the value of the Guyana dollar is. Now, I want you to bear in mind that Guyana, we have to separate the oil from the non-oil economy, and we don’t generate (much from these) other than rice and some gold. We don’t have an export industry that is generating a lot of foreign currency,” Hughes said.
He added that it would be artificial to look at the Gross Domestic Product (GPD) as the basis for assessing the country’s progress. Instead, the non-oil sector should be looked at as it will be providing for the country post oil.
“That’s really where you need to look at in the economy, and I’m afraid that’s not a pretty picture at all. As a matter of fact, I think there’s a gross imbalance, and that’s part of the reason why we are in the situation that we are in,” Hughes noted.
On April 8 Kaieteur News reported that the government has injected a further US$100M into the banking system to address foreign currency shortages.
According to the Ministry of Finance, Vice-President Bharrat Jagdeo and Finance Minister Dr. Ashni Singh, along with Central Bank Governor Dr. Gobind Ganga, on met with the Chief Executive Officers and other representatives of commercial banks to discuss recent developments in the banking system specifically in relation to the market for foreign exchange.
At the meeting, note was taken of the continued availability of adequate levels of foreign currency in the financial system as a whole to meet ongoing demand, despite occasional timing differences. “These timing differences have resulted in some delays being encountered in the settlement of orders for foreign currency from time to time at some commercial banks,” the ministry’s statement said.
According to the ministry in order to ensure that pending requests for foreign currency are met in a timely manner, the decision was taken that a sum of US$100 million will be injected into the market with immediate effect and distributed across all commercial banks. “This injection will provide immediate relief to the system in meeting pending demand for foreign currency, while the temporary timing mismatches unwind themselves.
Meanwhile, the government said it remains closely engaged with the private sector including the commercial banks in the interest of ensuring that the market continues to function efficiently.
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