Instability from limited US dollars rocking business confidence – JMEA
The President of the Jamaica Manufacturers’ and Exporters’ Association (JMEA), Richard Pandohie, believes that the shortage of the United States dollars that members of the productive sector are facing is demoralising and diminishing the confidence of business operators.
In an interview with Loop News reporter Job Nelson, Pandohie urged a speedy solution to the crisis, which he cited as the second time in three months that the manufacturing sector has been hampered by a shortfall in the availability of US currency.
“We have been here as recently as October (of last year) and it is extraordinary that we are here again in January,” said Pandohie.
“The impact that could have is that it is hurting business confidence because now we are going to go into a cycle of what could be irrational behaviour, where people are going to start hoarding the US (dollar) because they don’t know when they are going to get it again.
“So it is creating a vicious cycle that will put additional pressure on the dollar, so that’s our concerns,” Pandohie elaborated.
According to him, the concerns are heightened because the indicators are pointing to enough US dollars in the system to supply all concerned, with the Bank of Jamaica (BOJ) telling the JMEA that there is not a supply issue, and the island is presently at the height of foreign currency income generation in the winter tourist season.
Pandohie said while there was a relaxing of the situation on Thursday after the JMEA went public, there remains a dire need for its members, as the estimate is that it will take approximately US$30 million to satisfy the outstanding demand, as the US$50,000 that each entity got was a minute part of the need.
“Something is happening somewhere in the middle that is inexplicable to us. Since the beginning of the year, there has been a noticeable tightening in the supply to the point where for the last six to seven working days, it has literally dried up.
“Most manufacturers, most companies have been unable to access funds to pay their bills, to do their normal course of business. It is creating havoc on our businesses to pay and run properly. This is why we simply want a sustainable solution,” Pandohie said.
He said in October the commercial banks were “being less than responsible”, in a jab that cast blame on them for the shortage of the US dollar. While stating that the current situation is confusing, he, however, would not blame the banks this time around.
“I don’t know if that’s the case this time because when I speak to the commercial banks, they are saying there is a liquidity problem. They have a crunch and they just don’t have the funds, and I have to take their word for it.
“The cynics amongst us will say that it looks like some sort of manipulation because the rate is now moving extraordinary high,” Pandohie stated.
According to him, several manufacturers have had raw material shipments delayed as suppliers demand payment.
“I don’t know if I can say that any business has been materially affected at this stage, because it is a bit early, but what I can say is, certainly, the confidence has been rocked,” he concluded.