Virgil once wrote, “Timeo Damaos et dona fermenters”, translated to “Beware of Greeks bearing gifts”.
Over time, we have been taught to be wary of anyone offering presents!
The Finance Minister has recently alerted the public that in 2020 he will be offering bonds to the business communities to whom his Government owes some $4.5 billion in value added tax (VAT) refunds!
This significant debt by Government to the business community has grown over time through poor fiscal management of the VAT regime.
The bonds, he claims, will attract one and a half per cent interest per annum or they can be monetised through the banking system for cash.
The VAT law states that any VAT refunds over six months shall attract interest of one per cent per month or 12 per cent per annum. The offer of 1 ½ per cent therefore seems guileful and illusory!
If, however, one attempts to cash in the bonds through the banking system, you will receive approximately 30-35 per cent less than the value of the bonds (my interpretation).
So, why would any right-thinking business owner forfeit 10½ per cent interest per annum or take a huge haircut to monetise the bonds?
When one is cash-strapped one may have no choice!
I am made to understand, however, that a few businesses who do not have any political connect to defend have opted to take the legal route with the Government and have been successful in receiving their just due.
It seems to me that with local elections due today and the national election looming that the Minister of Finance finds it prudent to ease the financial tension surrounding the VAT issue.
What is patently clear, however, is that through his tenure as Minister of Finance he has proved woefully short of financial mastery and as a result now finds himself vulnerable and exposed.
If the business community closed ranks on this VAT issue and collectively challenged the Minister, it would take substantially more than a smoke and mirrors show to forestall his demise.