Government, energy sector discuss forex measures

Gov­ern­ment is look­ing at new ways to ease for­eign ex­change short­ages, al­though of­fi­cials say the mea­sures will not in­crease the over­all sup­ply of US dol­lars. Se­nior min­is­ters and the Cen­tral Bank met with en­er­gy sec­tor rep­re­sen­ta­tives on Fri­day to dis­cuss im­prov­ing how for­eign ex­change is al­lo­cat­ed across the mar­ket.

Cen­tral Bank Gov­er­nor Lar­ry Howai met with Fi­nance Min­is­ter Dav­en­dranath Tan­coo, Plan­ning, Eco­nom­ic Af­fairs and De­vel­op­ment Min­is­ter Kennedy Swarats­ingh, En­er­gy and En­er­gy In­dus­tries Min­is­ter Dr Roodal Mooni­lal and key en­er­gy sec­tor stake­hold­ers on Fri­day to dis­cuss pos­si­ble mea­sures.

The Cen­tral Bank said dis­cus­sions fo­cused on short-term ini­tia­tives to im­prove the ef­fi­cien­cy of for­eign ex­change al­lo­ca­tion and ease cur­rent mar­ket con­straints.

How­ev­er, no de­ci­sions were an­nounced fol­low­ing the meet­ing. While of­fi­cials re­ferred to “short-term ini­tia­tives”, they did not out­line what those mea­sures would in­volve or when they could be im­ple­ment­ed.

The bank said en­er­gy sec­tor con­ver­sions re­main the coun­try’s main source of for­eign ex­change, ac­count­ing for be­tween 60 and 75 per cent of mar­ket con­ver­sions.

It said for­eign ex­change sales by en­er­gy com­pa­nies have de­clined by an es­ti­mat­ed US$1.2 bil­lion an­nu­al­ly over the past decade, while de­mand con­tin­ues to ex­ceed sup­ply.

The Cen­tral Bank said ex­pect­ed im­prove­ments in do­mes­tic oil and gas pro­duc­tion from late 2027 could help ease pres­sures, but tar­get­ed short-term mea­sures are need­ed in the mean­time.

It added that the pro­posed ini­tia­tives are not ex­pect­ed to in­crease the over­all sup­ply of for­eign ex­change but could im­prove dis­tri­b­u­tion and pro­vide some re­lief in the near to medi­um term.

Gov­er­nor Howai said con­tin­ued col­lab­o­ra­tion be­tween the Gov­ern­ment, the Cen­tral Bank and the en­er­gy sec­tor will sup­port ef­forts to man­age the for­eign ex­change mar­ket and pro­mote greater sta­bil­i­ty.