By Prior Beharry
MINISTER of Finance Colm Imbert says Republic Bank’s decision to cut credit card spending from US$10,000 to US$5,000 was not discussed with him.
In a release on Saturday, Imbert said, “The Minister of Finance has noted a lot of uninformed and speculative commentary in the public domain regarding a recent decision of Republic Bank to reduce credit card limits from US$10,000 to US$5,000 and an unfounded belief that this move by the Bank was done on the Minister’s instructions.
“It is necessary to clear the air on this issue. Firstly, it must be made clear that the Minister of Finance was not involved in any way in this matter and as a rule the Minister of Finance does not interfere with the day-to-day operations and internal decisions of our commercial banks.
“It must also be understood that Trinidad and Tobago has an open economy with a free market system, and further, foreign exchange controls were largely abolished 20 years ago in 1993, when the currency was floated.”
He said, “In this case, Republic Bank made this decision to cut credit card limits by 50% on its own without any discussion with the Minister of Finance.”
Imbert said, “Upon investigation, the Bank advised that its credit card sales had reached an unsustainable level in September 2023, and it had no choice but to reduce the limits on credit cards to stay within its own approved guidelines for what is referred to in the industry as a “short position”.
He said, “Upon being informed of this decision of Republic Bank, after the fact, it was determined by the Ministry of Finance that the sales by all banks of foreign exchange using credit cards in Trinidad and Tobago (overseas transactions) had in fact reached close to US$6 million a day in September 2023, with Republic Bank being responsible for a significant percentage of these sales.
“It is noteworthy that at the rate of credit card usage that has been recorded up to the end of August 2023, it is estimated that credit card sales using foreign exchange will reach US$2 billion in 2023, which is 45% higher that the pre-Covid level of US$1.38 billion in credit card sales using foreign exchange in 2019.
“As a first step to alleviate the situation, the Minister of Finance requested the Central Bank to inject a further US$50 million into the banking system, on a one-off basis (i.e. in addition to the usual fortnightly injection) which was done on Wednesday September 19, 2023.”
