IN 2021, the World Bank estimated TT’s total imports at US$5.76 billion. More recently, the Central Bank of TT's monetary policy report for May 2024 said imports were recorded at US$1.72 billion for the fourth quarter of 2023, a year-on-year reduction from the same period in 2022 of one per cent.
The World Bank said more than 3,000 products were imported into TT for 2022.
For each of these products, businesses require foreign exchange (forex) to trade on international markets. Forex is also required in many cases when paying to import products.
The fact is, for TT, every aspect of foreign trade requires access to foreign exchange, especially US dollars, the universal currency of this hemisphere. So when business owners complain about not having enough, that claim is by no means trivial.
Small and medium enterprises (SMEs) usually depend on banks, but are at a particular disadvantage, having limited access to foreign exchange and limited relationships with banks.
But banks have had to manage the flow of foreign exchange to customers, leading to adjustments to credit-card limits, which many SMEs use, in one way or another, to buy products online for import.
With new policies in place, small businesses are finding themselves under added pressure to find forex for imports.
Falling forex
The Central Bank is responsible for the management of the forex market under the Exchange Control Act. It licenses authorised dealers in foreign exchange, which includes commercial banks and non-bank financial institutions such as insurance firms and currency exchanges.
The Central Bank acts as one of the suppliers of foreign exchange to commercial banks and other institutions. Banks also get foreign exchange from customer conversions.
For businesses, there are a few ways to gain access to forex. The first is through the banking system, and the second is through forex earned for products that are exported. Examples of this are products manufactured in TT and exported, or forex-denominated loans with banks and financial institutions.
For small and micro businesses, credit-card transactions are also one of the major ways to gain access to foreign exchange, as this way they can buy products directly online, instead of by wire transfer.
“A lot of micro and small businesses use their credit cards to purchase goods, mainly imports, and then resell them locally," said president of the TT Chamber of Industry and Commerce (TTCIC) Kiran Maharaj.
[caption id="attachment_1098274" align="alignnone" width="693"] TT Chamber president Kiran Maharaj delivers her remarks at the TT Business Outlook 2024 seminar.Photo courtesy TT Chamber -[/caption]
She added since the loss of jobs and changes in employment in the post-pandemic period, the chamber has observed that there has been development in the growth of the informal economy – a diversified set of economic activities, enterprises, jobs and workers that are not regulated or protected by the state.
“This means additional demand for foreign exchange by micro and small busi
