Government, energy sector discuss forex measures

Government is looking at new ways to ease foreign exchange shortages, although officials say the measures will not increase the overall supply of US dollars. Senior ministers and the Central Bank met with energy sector representatives on Friday to discuss improving how foreign exchange is allocated across the market.

Central Bank Governor Larry Howai met with Finance Minister Davendranath Tancoo, Planning, Economic Affairs and Development Minister Kennedy Swaratsingh, Energy and Energy Industries Minister Dr Roodal Moonilal and key energy sector stakeholders on Friday to discuss possible measures.

The Central Bank said discussions focused on short-term initiatives to improve the efficiency of foreign exchange allocation and ease current market constraints.

However, no decisions were announced following the meeting. While officials referred to “short-term initiatives”, they did not outline what those measures would involve or when they could be implemented.

The bank said energy sector conversions remain the country’s main source of foreign exchange, accounting for between 60 and 75 per cent of market conversions.

It said foreign exchange sales by energy companies have declined by an estimated US$1.2 billion annually over the past decade, while demand continues to exceed supply.

The Central Bank said expected improvements in domestic oil and gas production from late 2027 could help ease pressures, but targeted short-term measures are needed in the meantime.

It added that the proposed initiatives are not expected to increase the overall supply of foreign exchange but could improve distribution and provide some relief in the near to medium term.

Governor Howai said continued collaboration between the Government, the Central Bank and the energy sector will support efforts to manage the foreign exchange market and promote greater stability.