Central Bank Governor: No Quick Fix For Foreign Exchange Woes
Central Bank Governor Larry Howai is dismissing claims that Trinidad and Tobago’s foreign exchange crisis is merely an allocation problem.
Speaking during a panel discussion hosted by the Trinidad and Tobago Manufacturers’ Association (TTMA) on Wednesday, he noted that the country is facing a sustained decline in foreign currency inflows, largely due to reduced energy production.
« If I compare 2025 with, say, 10 years before, our foreign exchange inflows from the energy sector is about close to one billion US dollars less per annum. »
For years, businesses have complained about the availability of foreign exchange and how it is distributed.
But Mr. Howai says the root of the problem lies elsewhere – in a steady decline in foreign currency entering the country.
He explained that while several major offshore gas projects are currently in development, they will not provide immediate relief, as production is expected to increase gradually over several years.
« And it won’t be when these come in, it’s not going to be like magic. We’re going to be from 2.5 billion standard cubic feet to 4.5 billion standard cubic feet. It’s going to be gradual. »
The Central Bank Governor addressed complaints about how foreign exchange is allocated.
« As you start to tinker with the allocation system, of course, everyone gets upset because if you have to do so, it means that you’re taking something from one place to give it to another. So one side will be happier. »
Mr. Howai corrected what he described as a widespread misunderstanding about the Central Bank’s role in the foreign exchange market.
« In fact, 80% of the foreign exchange that comes into the system bypasses the Central Bank. It doesn’t come to the Central Bank to come into the system. It comes straight into the commercial banks. So that the bulk of the foreign exchange that comes in doesn’t come to us. I think many people think of the Central Bank actually is the one that puts the foreign exchange into the system. We don’t. »
Despite ongoing shortages facing businesses, he defended the Central Bank’s management of reserves, pointing to direct intervention over the past year.
« March last year, our foreign exchange reserves were about 5.4 billion. Today, it’s 5.5 billion. It’s not much more than it was then, but this is after we’ve put in the Central Bank itself 1.2 billion over the past year to help stabilise the economy. »
The Central Bank Governor says forex conditions should improve as new energy projects come on stream and non-energy exports expand, but stressed that any recovery will be incremental rather than immediate.
