PRICESMART INC, a membership shopping business, has accumulated approximately US$70.1 million worth of Trinidad and Tobago dollars that it cannot readily convert into other foreign currencies, the company said in its financial statements released Wednesday.

The situation highlights the ongoing foreign exchange challenges facing businesses in the twin-island republic. PriceSmart’s financial statements were giving a snapshot of its performance in September-November period which is the first quarter of its financial year.

PriceSmart operates four warehouse clubs in Trinidad, the largest presence in any English-speaking Caribbean nation. The company has struggled to secure sufficient hard currency, particularly US dollars, to meet its obligations since its 2017 fiscal year.

PriceSmart has been grappling with trapped capital in Trinidad and Tobago since 2017, prompting it to disclose the issue in its financial reports. Essentially, the company has excess funds stuck in the country due to foreign exchange restrictions, making it difficult to convert them into US dollars. As of November 2017, PriceSmart held $4 million in USD-denominated assets, but had $12.1 million in USD-denominated liabilities, exacerbating the problem. In response, the company reduced shipments to Trinidad by 20 per cent in the first half of its 2017 fiscal year, in an effort to mitigate the impact.

PriceSmart’s trapped capital in Trinidad and Tobago continued to swell, with the company reporting a net asset position of US$24.9 million in August 2019. This figure represents the amount by which the company’s assets denominated in Trinidad and Tobago dollars (TTD) exceed its liabilities in the same currency. In other words, it’s the amount of TTD that PriceSmart has accumulated but cannot easily convert into other currencies. The balance ballooned to US$62.4 million by February 2020, then to US$79.6 million in August 2020, before peaking at US$100.5 million in November 2020.

PriceSmart took steps to mitigate its foreign exchange challenges in Trinidad and Tobago, securing hard currency financing from local banks and diversifying its revenue streams by exporting to other territories and sourcing euros and Canadian dollars. These efforts helped reduce the company’s Trinidad and Tobago dollar (TTD) cash balances, which fell to US$18.32 million in August 2023. However, the balance subsequently surged to US$60.2 million in August 2024 and US$70.1 million in November 2024. As of November, PriceSmart’s foreign subsidiaries held US$132.61 million in cash and cash equivalents.

“We are working with our banks in Trinidad and government officials to convert all of our Trinidad dollars into tradable currencies. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the US dollar and affects the level of US dollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to US dollars, as well as being exposed to the risk of a potential devaluation of the currency,” PriceSmart said in its 10-Q (quarterly report) filing.

Undeterred by its foreign exchange challenges, PriceSmart has continued to invest in Trinidad and Tobago, completing a remodel of its Port of Spain warehouse club in late 2024 and progressing with the development of a distribution centre.

PriceSmart was previously identified as one of the largest users of foreign exchange in Trinidad, having sourced US$507 million between 2012 and 2015, according to former Trinidad central bank Governor Jwala Rambarran. AS Bryden, another major company, used US$153 million in foreign exchange over the same period.

Trinidad and Tobago’s foreign exchange woes have intensified over the past two years, prompting major banks to impose stricter limits on US dollar transactions. Republic Bank, RBC Royal Bank and Scotiabank have all slashed the available USD limits on debit and credit cards. In a drastic move, Scotiabank halted all overseas withdrawals and purchases on its debit cards effective December 1.

The foreign exchange crunch has also taken a toll on conglomerate Massy Holdings Limited, which reported that its motors and machines segment was impacted during its 2024 fiscal year. Although Massy has subsidiaries that generate hard currency through remittances and other activities, the majority of its revenue remains tied to the local market, leaving it vulnerable to the foreign exchange challenges.

“It is extremely important that we allocate capital across various markets in alignment with the growth objectives of each of the portfolios. From a geographic perspective, we will be increasing our focus on investing in territories where hard currencies are earned, and those that allow for greater capital mobility to permit easier repatriation of funds back to the parent company, to support our capital requirements, including payment of dividends to shareholders,” said David Affonso, Massy’s new group president and chief executive officer (CEO), in the 2024 annual report.

Massy Holdings Limited is making progress towards its ambitious 2030 goal of generating US$4 billion in revenue, having already surpassed the halfway mark. In 2024, the conglomerate reported consolidated revenue of US$2.34 billion (TT$15.72 billion), with group CFO and Deputy CEO James McLetchie highlighting the year as a record for cash flow generation and a transformative period for disciplined hard currency growth, in the company’s annual report.

Massy Holdings Limited has been expanding its footprint through strategic acquisitions, including the purchase of Florida-based supermarket chain Rowe’s IGA Group for US$47 million in December 2022. The company also acquired IGL (St Lucia) Limited, which owns IGL Limited, a Jamaican distributor of liquefied petroleum gas (LPG) and manufacturer of medical and industrial gases, for US$140.3 million in May 2023.

Agostini’s Limited, a publicly traded Trinidadian company, also made a significant acquisition, spending TT$139.32 million ($3.17 billion) to purchase Health Brands Limited, a Jamaican pharmaceutical distributor, in August 2023.

Despite the foreign exchange challenges in Trinidad, Jamaican companies and other regional businesses have been actively investing in the twin-island republic. Notable deals from Jamaica include NCB Financial Group’s acquisition of majority control in Guardian Holdings in May 2019, and General Accident Insurance’s purchase of a majority stake in Motor One Insurance in September 2019. More recently, Seprod Limited acquired a majority stake in AS Bryden & Sons Holdings in June 2022, as part of its ambitious plan to reach US$1 billion in revenues in the coming years.

AS Bryden & Sons Holdings (ASBH) has been grappling with the high cost of sourcing foreign exchange in Trinidad, which has driven up its finance expenses, as noted in its last two quarterly reports. Although its recent acquisition of Caribbean Producers (Jamaica) Limited in 2024 is expected to improve its foreign exchange sourcing capabilities, the company still faces challenges in Trinidad. This is set against the backdrop of Trinidad’s dwindling net international reserves (NIR), which have plummeted from US$11.3 billion in November 2014 to US$5.46 billion in November 2024. In contrast, Jamaica has seen its NIR grow from US$2 billion to US$5.41 billion over the same period, despite Trinidad’s economy being roughly twice the size of Jamaica’s.

Investors in PriceSmart, Massy Holdings, and AS Bryden & Sons Holdings (ASBH) have several key events to look forward to this month. PriceSmart has already held its earnings call on January 10, while Massy Holdings is set to convene its 101st hybrid annual general meeting (AGM) on January 15.

ASBH, meanwhile, will hold an electronic extraordinary general meeting (EGM) on January 16, where shareholders will vote on the appointment of Thomas ‘’Tom’’ Tyler as a director. Tyler, a co-founder of Caribbean Producers (Jamaica) Limited (CPJ), acquired by ASBH in 2024, recently became a shareholder of the company along with fellow co-founder Anthony Mark Hart. Hart was appointed to the board of Seprod, ASBH’s parent company, on November 27.

ASBH is also poised to list on the Trinidad & Tobago Stock Exchange by March, having already listed newly issued ordinary shares on the Jamaica Stock Exchange in December.