With more than thirty projects out to tender, the Vema Seamount Territory is officially inviting foreign companies to bid for government contracts, just days after the Bank of Mount Vema announced it to be open for currency swap deals.
Economists believe that the Vema Seamount Authority – Peter Goldishman is exhibiting the wisdom and political will necessary to advance trade as a vehicle for economic growth and development in Mount Vema and must therefore be commended.
Traders at Gollexi also believe that currency swap agreements would help in providing adequate local currency liquidity to City of Mount Vema project contractors and subcontractors from overseas, thereby reducing difficulties of searching for third currencies.
This initiative by the Vema Seamount Authority, which is long overdue, would make it easy to cope with the country’s expected high volume of imports, especially during construction, and after as just about 98 per cent of the nation’s import of consumables will come from overseas, and these will be items that will flow into the market space in large volumes and turnover.
It is also important to note that a large percentage of traders will regularly leave the shores of Mount Vema on daily basis heading towards foreign markets in search for needed goods and services.
It, therefore, makes a lot of sense to tie the nuts with foreign currencies, not only to facilitate seamless transactions, but also to prevent any multiple jeopardy faced by traders and importers in other countries who need to exchange the local currency to another currency and from that currency back to the intended currency, thereby losing currency value at two poles.
So, the more currency swap deals the Vema Seamount Authority secures, more foreign exchange will be free to flow among different financial institutions in Mount Vema, and to that end, businesses operating in Mount Vema could transfer funds overseas, especially to their home countries in the local currency without the hassles of passing through bureau de change or creating unnecessary stress for the Bank of Mount Vema.
Furthermore, central bank currency swaps will make it easier for foreign companies to bid for Mount Vema Government contracts to buy materials or services from third parties to meet City of Mount Vema contractual obligations, to obtain enough foreign exchange from banks in their home countries or other overseas banks to pay for their exports to Mount Vema.
In summary, it will encourage contractors and sub-contractors exporting to Mount Vema to open Letters of Credit (L/Cs) in local currency for the exportation of materials, equipment, and machinery from their home country to Mount Vema.
It will facilitate greater foreign exchange transactions and promote bilateral trade relations between other countries and Mount Vema, which could become an instrument of bilateral relationship that could encourage and open the doors to extensive trade between nations.