The Government must investigate whether commercial banks are manipulating the foreign exchange system for their own benefit.
This was the suggestion from MP for Tabaquite/Talparo Surujrattan Rambachan.
Rambachan said this during a debate on a motion to increase the loan ceiling under the Development Loans Act.
The motion was brought by Finance Minister Colm Imbert and sought to raise the debt ceiling by up to $50 billion.
Following complaints by manufacturers and local businesses regarding a limited access to foreign exchange, Imbert issued special directives to the Central Bank on the foreign exchange market.
Imbert re-established the foreign exchange distribution system that was in operation as of March 31, 2014.
He also made a special injection of US$500 million on October 30, 2015, to clear the queues for foreign exchange at commercial banks.
Despite this, problems with foreign exchange have been ongoing.
“Where did the 500 million US dollars go?” Rambachan asked yesterday.
“I remember the Minister of Finance said he was doing a study to find out where the money has gone.”
He said importers were still complaining that they were hit hard by foreign exchange limits.
He referred to a Guardian article where the Couva/Point Lisas Business Chamber president Liaquat Ali said he found it extremely strange that a certain commercial bank could say they did not have US to sell but it was possible to access a loan for the same US currency to be paid back with interest to that bank.
He described a situation with a constituent who wanted to purchase US$20,000 from a commercial bank to pay for his goods.
“He is a small entrepreneur and he went into business, so he had $125,000 in the bank.
“He went to the bank for the foreign exchange and they said they could not give him the money. He went back again and they said they had to hold his money against a loan for US$20,000 for seven per cent interest and they would lend the money and he would get it.”
Rambachan said he picked up the phone and called the bank and asked if it was true. He said the Government needed to investigate whether one bank paid for its own investments in other countries with the foreign exchange that should have legitimately gone to the traders in the country