THE call by the Trinidad and Tobago Chamber of Industry and Commerce for a market driven exchange rate has pushed a long avoided issue into the open. For years, policymakers have defended an official rate of TT$6.78 while businesses and households quietly navigated a parallel market priced far higher. The gap between the two is not a rumour. It is evidence. It tells you demand for foreign exchange exceeds supply at the official rate. That reality now forces a national choice.

The Chamber’s position reflects genuine business frustration. Firms cannot plan. Access to foreign exchange is uneven. Smaller operators wait while larger players manage. Investment decisions stall. Confidence weakens. From that vantage point, a market driven exchange rate looks like clarity. One rate. Fewer distortions. Better price signals. In theory, it restores order.

But economic policy does not operate in theory. It operates in a country with a specific structure, history, and social fabric. Trinidad and Tobago is not a diversified manufacturing economy. It is not a large agricultural exporter. It is not a low import economy with deep social buffers. Those distinctions matter.

Trinidad and Tobago imports the bulk of what it consumes. Food, medicine, household goods, building materials, and production inputs all rely on foreign exchange. A move to a market driven exchange rate would almost certainly mean a sharp depreciation from the current official level. That change would flow quickly into prices. Supermarkets would reprice. Pharmacies would reprice. Transport and utilities would follow. Wages would not move at the same pace.

Supporters of devaluation often point to competitiveness and exports. The logic is simple. A weaker currency makes exports cheaper and imports more expensive. The problem is that this logic assumes an export base ready to respond. In Trinidad and Tobago, export earnings remain dominated by energy. Energy exports are already priced in US dollars. Outside of energy, non energy exports remain narrow and constrained by scale, logistics, access to finance, and policy inconsistency. Agriculture remains fragmented, undercapitalised, and exposed to climate shocks. A weaker currency raises input costs for these sectors before it improves output.

There is also the social dimension. Devaluation is regressive. Lower income households spend a higher share of income on food, transport, and basic services. When prices rise, they feel it first and longest. Countries that manage devaluation successfully rely on strong, targeted transfer systems to cushion the impact. Trinidad and Tobago’s support mechanisms are uneven and slow. Without rapid intervention, the cost of adjustment shifts directly onto households.

This is why the exchange rate debate cannot be isolated from governance. A market driven exchange rate reflects fiscal behaviour. Persistent deficits, loose spending, and weak revenue effort show up in the currency. If government does not change course, the rate keeps sliding. Inflation becomes embedded. Expectations harden. Trust erodes. The exchange rate becomes a daily referendum on policy credibility.

The Chamber is right to challenge the status quo. Defending an artificial rate through rationing and silence has costs. It fuels a parallel market. It distorts decision making. It rewards access over productivity. But replacing one flawed system with another shock driven adjustment would be reckless.

The honest assessment is that Trinidad and Tobago is not fully tooled today for a sharp devaluation without serious fallout. That does not mean reform should be postponed indefinitely. It means reform must be sequenced and supported.

Income support must be targeted and immediate. This is not about broad subsidies. It is about temporary cash transfers tied to income thresholds and adjusted for inflation. The data already exists. What is required is speed and administrative focus. Households cannot absorb rising prices while waiting months for relief.

Food security must move from rhetoric to delivery. Remove VAT on all agricultural inputs such as seeds, fertilisers, feed, and basic equipment. Reduce delays in land access. Fix farm to market roads. Support storage, aggregation, and transport. Every increase in local food supply reduces foreign exchange pressure and price volatility.

The state must visibly share the burden. Temporary tax relief for lower income earners matters. Equally important is restraint in public spending. Devaluation while maintaining old cost structures signals that adjustment is being passed down, not shared. That undermines legitimacy.

Foreign exchange allocation must become transparent and rules based. If pricing moves closer to market levels, discretion must shrink. Clear priority rules for essential imports, consistent reporting by financial institutions, and regular public data releases reduce panic and speculation.

Expectations must be anchored with a credible medium term plan. Government must publish a clear three year framework covering fiscal targets, debt management, energy revenue assumptions, and non energy growth actions. People accept hardship when they see direction. They resist it when they see improvisation.

What Trinidad and Tobago cannot afford is half truth reform. Calling for a market driven exchange rate without accepting the discipline it demands is policy theatre. The country already lives with devaluation. It is simply hidden, uneven, and borne quietly by households and small businesses while confidence drains away.

If the exchange rate is to be formalised, responsibility must be formalised as well. That means protecting the vulnerable, imposing discipline on public spending, and managing the transition with competence and fairness.

A market driven exchange rate is not a starting point. It is the final step in a serious reform process. Skip the preparation, and the cost will not be measured in balance sheets, but in households that simply cannot absorb another shock. – Rushton Paray is the former MP for Mayaro