THE EDITOR: The recent decision by Republic Bank to cut its US dollar credit card limit in half has raised concerns about the state of the foreign exchange (forex) market in the country. While the focus here is on Republic Bank, it is essential to consider the broader implications for other banks as well.
Small and medium-sized enterprises (SMEs) are likely to be adversely affected by this reduction in credit card limits as they rely on credit for various business expenses. However, it appears that larger companies with established operations in the US may not face the same challenges as they can access forex directly through their US subsidiaries.
For instance, freight companies that have established operations in the US may choose to switch to a prepayment model for their services, requiring customers to pay for freight upfront. This shift could impact local businesses that previously relied on collecting freight charges locally before sending payments to their US counterparts.
Furthermore, the extended time it takes for banks to provide US$500 to customers, coupled with high service charges on US dollar accounts, indicates that the availability of foreign exchange is limited. This scarcity can have a detrimental effect on local manufacturers and businesses that depend on imported goods and services.
The situation highlights the economic challenges the country is facing, and it calls for innovative and fresh approaches to revitalise the economy. The Government's budget decisions, often seen as favouring certain groups while imposing heavy taxes on citizens, have raised concerns about the overall economic strategy.
It's worth noting that the Government's handling of the Petrotrin shutdown, which resulted in unemployment for employees and negatively impacted local businesses, has had a ripple effect on the economy.
Additionally, the disparity between the treatment of individuals and the Government in dealing with bank loans and repayments is a point of contention. While individuals often face harsh treatment from banks, the Government seems to negotiate more favourable terms.
Examples like the construction of Baliser House for $400 million, the purchase of a townhouse for $3 million, and extravagant spending on events like symposiums and tea parties raise questions about fiscal responsibility. Furthermore, the outstanding debt of NGC at $400 million adds to the financial challenges faced by the country.
In summary, the reduction in credit card limits by Republic Bank is a symptom of broader issues in the forex market and the economy. It calls for a re-evaluation of economic policies and practices to address the challenges faced by both businesses and individuals.
GORDON LAUGHLIN
via-e-mail
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