Trinidad and Tobago’s Finance Minister Responds to IMF Recommendation

Finance Minister’s Response

PORT OF SPAIN, Trinidad, CMC – Finance Minister Colm Imbert says the recommendation by the International Monetary Fund (IMF) for the Trinidad and Tobago government to float the local currency is “not new,” reiterating that the Keith Rowley government “has consistently stated since 2015 that it maintains our fixed exchange rate to control inflation, which is now almost the lowest in the world.”

Imbert stated that the media commentary, recommendations, and demands can be summarized as the Government allowing the local currency to be devalued “because the IMF says so” and that the Government should get involved directly in the distribution of foreign exchange and not leave it up to the commercial banks or the Central Bank “to address a perception of unfair distribution of forex.”

He said there is also the belief that the Government should yield to pressure from business people and the Express newspaper and resume the forex window at the EximBank for essential imports.

The IMF’s Recommendation is Not New

Imbert emphasized that the IMF’s recommendation to allow the TT dollar to float is not new and has been repeated since 2012. He stated that the IMF recommended “greater exchange rate flexibility to allow pricing to play a bigger role in equilibrating the market” and reiterated this in the IMF’s 2013 Article IV Report on Trinidad and Tobago.

Barbados’ Experience

Imbert noted that Barbados, which has been in an IMF program for many years and almost ran out of foreign reserves at one point within the last 10 years, has resolutely refused for the last 49 years to float or devalue its dollar. He stated that Barbados has managed to keep its dollar fixed for so long and has managed to restrict capital flows, despite being in an IMF program.

Government’s Response

Imbert announced that he will be holding consultations over the next month with various interest groups to determine the best way forward regarding the distribution of foreign exchange. He emphasized that the Government has already created forex windows at the EximBank, which have been working well, and that these are policy instruments designed to facilitate diversification of the economy and ensure that forex is available for essential items.

Conclusion

In conclusion, the Finance Minister’s response emphasizes that the IMF’s recommendation to float the TT dollar is not new and that the Government has consistently maintained a fixed exchange rate to control inflation. He noted that the Government will hold consultations with interest groups to determine the best way forward regarding the distribution of foreign exchange.

Frequently Asked Questions

Q: Why did the IMF recommend that the TT dollar be floated?
A: The IMF recommended that the TT dollar be floated to allow for greater exchange rate flexibility and to allow pricing to play a bigger role in equilibrating the market.

Q: What has been the Government’s response to the IMF’s recommendation?
A: The Government has consistently maintained a fixed exchange rate to control inflation and has not imposed any hardship on the poor and vulnerable by giving into the irrational demands of the Guardian newspaper and other provocateurs.

Q: What are the Government’s plans regarding the distribution of foreign exchange?
A: The Government has announced that it will hold consultations over the next month with various interest groups to determine the best way forward regarding the distribution of foreign exchange.