A TOTAL of US$296 million (TT$2 billion) has been sold to 123 manufacturing companies from 2018 as of Monday May 9 through the Foreign Exchange Facility of the Export and Import Bank of Trinidad and Tobago ( EXIMBank), designed specifically for manufacturers.
The availability of foreign currency has been a problem that has plagued the country for at least eight years, which in turn has prevented manufacturers from exporting.
In 2018, the Ministry of Finance launched the EXIMBank Forex Facility, to ease the burden by financing essential imports that manufacturers need to export.
In an interview with Express Business last Friday at his office in Queens Park West, Port of Spain, EXIMBank Managing Director Navin Dookeran said that when the facility launched in 2018 there were a few hiccups. that needed to be resolved. Dookeran was named CEO in 2019.
Dookeran said one of the first things he did when he started at financial institution EXIMBank, was to work with the Trinidad and Tobago Manufacturers Association (TTMA) to co-develop a new program, as the criteria before almost excluded manufacturers from applying for currencies.
He explained that to be eligible in 2018, at least 30% of a company’s production had to be for export, and in the case of existing established manufacturers, to be eligible, those companies had to agree to repatriate an amount. appropriate of their foreign exchange earnings. .
“This model was not feasible at all, so we partnered with the TTMA to figure out how to make fair and equitable allocations per company and not have everyone under one roof. This is because every business is different and what will work for one business will not work for another.
“The exchange facility started with zero customers and now we have 123 manufacturers and the aim is to attract more. So we are working with the TTMA to help increase the numbers,” he said.
Dookeran said that in 2020 the bank sold $75 million, which contributed $190 million in exports. In 2021, manufacturers received US$147 million from EXIMBank, which contributed to US$245 million in exports.
Additionally, in response to the Covid-19 pandemic, over US$335 million has been disbursed to 69 companies importing essential items such as pharmaceuticals, personal protective equipment (PPE), food and beverages. , cleaning supplies and non-food items like batteries and light. bulbs, Dookeran said.
He noted that part of the criteria for manufacturers to obtain the foreign currency is that they must apply online and upload their company’s financial statements.
“You must be in good standing and have exported or now want to export to be eligible. What can I say, to maintain transparency, the manufacturer does not receive the currencies, they go directly to the international supplier. Each month, the manufacturer pays a monthly fee in order to continue accessing the facility. Although I can’t divulge how much, I can say it’s a good rate as businesses are staying and more are expected to join,” he pointed out.
The executive, who is the son of former finance minister Winston Dookeran, said the process is much easier now because all manufacturers can qualify.
“We have even opened it up to micro, small and medium-sized enterprises (MSMEs) and encourage these businesses to join us. You don’t have to export today… but you can fill in your export plan on our online excel sheet and we can give you foreign exchange for a year because at that time you should have make at least one export sale,” he noted.
In March, Finance Minister Colm Imbert announced that his ministry was seeking to increase the allocation of foreign exchange to EXIMBank, allow increased allocations to importers of essential items and expand the availability of foreign exchange to MSMEs.
“We are going to put a lot more money into these special windows at Eximbank to enable more of our local businesses to access foreign currency for productive purposes,” he said, while acknowledging the increased cost of goods and shipping caused by Covid. -19 pandemic and the Russian-Ukrainian war.
Dookeran said the bank generated an after-tax profit of TT$49.5 million in its fiscal year ended December 31, 2021. This represents a 342% increase from the $11.2 million achievement. TT in 2020.
He said the robust growth was due to the increase in foreign exchange revenue to TT$47.2 million, as the bank stepped up delivery of foreign exchange to manufacturers and importers of essential items, to execute the government policy of financial support to the sectors.
“Despite relatively flat interest income year-over-year, net interest income still increased 39% to TT$11.3 million as active cash management drove the refinancing and repayment of higher cost liabilities, reducing interest expense by TT$3.7 million and capitalizing on the global low interest rate environment.
“Reversal of impairment charges from a loss of TT$9.5 million to a positive reversal of TT$2.5 million, consistent with the experience of the banking industry year on year,” said- he declared.
According to Dookeran, the Foreign Exchange Facility for Manufacturers has served its purpose, having acted as a catalyst for economic growth and facilitated the acquisition of raw material inputs needed to ensure the sustainability of the manufacturing sector.
“Forex absorption capacity remained strong in key segments including food and beverages, building and construction, plastics and packaging, and furniture and appliances.”
He stressed the importance of state enterprises fulfilling their mandate and generating profits.
“We have transformed EXIMBank in this way now and made it profitable. Now, as I told you, I don’t want you to go back and look at all the past statements. So I will quickly say that there have been losses in the past. The reason is that back then, decades ago, the institution was fulfilling its social mandate and taking risks that a commercial bank would not take.
“The good thing now is with our earnings, we are now covering all those losses and now setting up so we can actually deploy more funds to the market with the earnings. Profits are reinvested in business investments. But, the losses, I won’t say there’s anyone to blame for that, it’s just a social mandate to leave high-risk companies, that’s what happens,” he said. he declares.
He attributed the performance and profitability to his hard-working team of just over 40 employees, led by Chief Operating Officer Josephine Ible and Chief Financial Officer Anthony Mohammed.
On the lending side of the bank’s operations, the CEO said that outside of their depreciated legacy portfolio, which they have already dealt with, a large part of the losses the bank incurred in 2019 involved covering all of these legacy items. .
“Thus, we no longer have any losses to bear. We have a portfolio of high-performance companies and we have not had, over the pandemic period, any deterioration in credit quality. So I’m pretty happy with that from a banking perspective… The key message here is that the profits we’ve made, for now, are being reinvested in businesses to make business investments and since 2020, the bank did not have problems with companies that did not repay loans.
Also, he said, if a customer wants to borrow money from the bank, they ask for the same collateral that a standard commercial bank would ask for.
“Real estate, tangible security, cash or something like that. This is how we corrected the credit portfolio. The fact is that we are only looking for secured loans.