Ja: No fixed rate of exchange

Finance Minister Dr Omar Davies yesterday rejected Opposition Leader Edward Seaga's proposal for a fixed exchange rate, arguing that such a policy held more disadvantages than benefits for the country.

"An arbitrary decision to re-introduce a fixed exchange rate system just will not wash," Davies told the House of Representatives as he closed the annual budget debate.

According to the finance minister, a fixed exchange regime had costs, and "a critical one relates to the removal of flexibility to respond to domestic and external shocks".

Seaga, in his presentation, had told Parliament that a strong case existed to examine the option of either a currency board with a fixed rate of exchange, or an independent Central Bank with a special regime to maintain a pegged rate, "as the means of ending the frustrations of a stagnant, debt-ridden economy".

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