In recent days, there has been some concern from some organizations including the Private Sector Commission and Chamber of Commerce of potentially a shortage of foreign exchange in some local markets. This seems to be inconsistent with the overall supply of foreign exchange and foreign reserve based on the Bank of Guyana, the central bank of the Government of Guyana. It is the responsibility of the Central Bank to ensure a steady and consistent availability of foreign reserve in the economy to facilitate trade and economic growth inexpensively.

Foreign exchange reserves are defined as a reserve of other currency, USD, Euro, Franc, Pound, as well as bonds, treasury bills and other government securities held by the Central Bank. As it stands now the economics firm, Trading Economics, with data from the Bank of Guyana indicate that Guyana has $721 USD millions in foreign exchange reserves as of April 2023. If there are shortages in local markets then the Central Bank should ensure that the local businesses are not impacted given that overall foreign exchange reserves. Certainly, it does not seem that the shortage is an overall lack of reserves held by the Bank.

Guyana is poised to continue to realize strong economic growth which will further put a strain on demand of foreign currencies, especially for imported goods. Guyana is projected to continue its impressive Gross Domestic Product growth into the 2023 with an estimated annual increase of 37 percent annually as stated by the International Monetary Fund (IMF). Further, the IMF projects that growth will continue into 2024 with an estimate 25.2 percent. At the time Guyana’s inflation is hovering at a 6 percent, which is similar to many industrialized economies, such as the United States, would put a lesser strain on prices of goods and services as well as local demand for foreign currency to maintain import levels. Seems like the Central Guyana is laser focus on the implications of aggressively growing economy

Other major macroeconomic factors that influences the foreign exchange reserve looks promising. For example, the net balance of trade, 4Q/22 stands at USD $2.307, while its exports are at $3.238 and outpaced its imports of $0.931, all in millions USD, which tells a favourable macroeconomic story, according to data from Trading Economics. The reason the macroeconomic data is important is that the general rule is that countries should have enough foreign exchange reserves equal to its imports for four to six months, which is clearly the case with Guyana. In addition, the number of tourists arriving in Guyana has increased from 0.086 to 0.158 million persons in 2021 brining a constant flow of foreign exchange although this is relatively disproportionate to its exports.

The IMF Executive is Board summarized (IMF, 9/27/2022) fiscal position as that “Guyana’s commercially recoverable petroleum reserves is expected to reach over 11 billion barrels, one of the highest levels per capita in the world. This could help Guyana build up substantial fiscal and external buffers to absorb shocks while addressing infrastructure gaps and human development, needs” (IMF Executive Board Concludes 2022 Article IV Consultation with Guyana, 9/27/2022).

Recent comments that there is a shortage of foreign currency is not economically substantiated and is not supported by independent fiscal institutions. The Bank has done a good job with the reserve and should tout its success and inform the business and local communities. Perhaps shocks in local banking should be remedied and dispel notion of widespread shortages, which would be impacting the domestic and international business climate.