Pay up time ahead - while there won’t be any gas price hike at this time, Government is in revenue collection mode on other fronts. And focus is on groups like CL Financial, which could owe Government - and taxpayers - up to $27.7 billion from the 2009 bailout of the former insurance giant Clico.
Finance Minister Colm Imbert confirmed these developments in his mid-year review in Parliament yesterday. He detailed an overall mixed picture of T&T’s economic and financial status.
While painting a more positive picture than previous reviews and saying T&T was transitioning to “a steady, sustainable growth path,” Imbert said Government’s focus will now be on revenue collection.
“Instead of new tax or tariff adjustments at this time, Government will intensify efforts on improving tax administration and compliance for the balance of this fiscal year and beyond.
“We need to see a quantum leap in the performance of our revenue collection agencies as soon as possible, since tax leakage and avoidance is widespread in T&T, resulting in a loss of billions of dollars in revenue,” Imbert said.
“Barring unforeseen circumstances, we’re on course to achieve our fiscal consolidation targets for 2017. (But) this is a difficult year for us as petroleum prices continue to be depressed.
“We must cut our coat to suit our cloth. We cannot continue with extravagance and excesses of the recent past. We must face reality and move forward understanding everyone’s required to make their contribution one way or another, big or small, rich or poor.”
Immediately before that, Imbert noted taxpayers could be owed as much as $27.7 billion from the 2009 Clico bailout and Government is now focusing on recovery of taxpayers’ funds.
Very early in his 79-minute address, Imbert dispelled Opposition speculation that he might have hiked diesel gas prices. He said Government intends, over 2015 and 2018, to remove the fuel subsidy “so the price of fuel will rise and fall according to changes in world oil prices and the ex-refinery price of petroleum products.”
“This requires the proper design and application of an appropriate pricing formula, being worked on at this time. There will thus be no increases in fuel prices in this mid-year review.”
On other revenue, Imbert said Government had expected to collect $6.3 billion in capital revenues in the first half of year.
“These funds were earmarked to come from proceeds from the sale of Clico’s shareholdings in Methanol Holdings International Limited (MHIL) of approximately $2.3 billion, as well as from the sales of other Clico assets expected to yield a further $3.4 billion.
“These transactions have been delayed because of complex legal, regulatory, corporate and administrative roadblocks which we’re in the process of unravelling once and for all.”
On the Clico resolution plan, Imbert said at September 2016, Government and taxpayers would have directly spent approximately $20.3 billion concerning the CLF bailout.
This while meeting the bailout’s primary objectives concerning traditional policy holders of Clico and British American and paying investors.
(See pages A6, A19, A21 and A22)
Under divestment strategies in the Government/CLF Shareholders’ agreement, Imbert said each of the companies sold had several liabilities that had to be treated with from the proceeds.
“...Resulting in minimal net returns which are being held pending full resolution of the repayment of debts to CLF’s creditors, including Government.”
Imbert said Government’s repayment plan envisages that “legitimate non-conflicted third party creditors” will be paid in addition to repayment of the Government’s debt.
“These remaining creditors include Clico and BAT’s legitimate policyholders (Clico: $9.8 billion; BAT: $800million) and the CIB Investment Note Certificate holders.”
Imbert said Government and the Central Bank are currently making efforts to divest the traditional insurance business of Clico and BAT via one or more portfolio transfers.
“After transfer of its traditional business, it’s estimated Clico, among other assets, will still hold approximately $2.8 billion in government bonds, cash and listed equities (excluding Republic Bank), including shares in the West Indian Tobacco Co. Ltd., JMMB Ltd, One Caribbean Media, First Citizens Bank Limited, Guardian Media Ltd, National Flour Mills Ltd, Guardian Holdings Ltd, Readymix (WI) Ltd, LJ Williams, T&T NGL Limited and others.”
