FINANCE Minister Colm Imbert said $1 billion worth of bonds as part of VAT refund payments will be issued from next month.
He was responding to a question in the House of Representatives on Friday.
He reported that no bonds have been issued to date and the first tranche of $1 billion will be issued by the end of March 2020.
“Two more tranches of $1 billion each to follow shortly thereafter.”
Pointe-a-Pierre MP David Lee asked the reason for the delay. Imbert replied there was no delay as the bonds were scheduled for the first quarter of 2020.
"One of the things we have considered is what the relevant interest rate should be and the relevant tenor of the bonds in order to ensure that businesses derive maximum benefit from the bonds. But there was no delay."
Caroni East MP Dr Tim Gopeesingh asked if any consideration was being given to changing the interest rate and Imbert replied this was being done. Lee then asked what was the interest rate on the first tranche of bonds.
Imbert replied: "What we are seeking to do is to ensure that the bonds would be traded at par. These are interest-bearing tax free bonds."
He said the interest rate would be somewhere between 2.5 and three per cent based on further discussions with the banks to see that they will trade the bonds at par.
"So people will get 100 cents on the dollar. That's what we're seeking to do."
Gopeesingh asked what would be Government's position for companies that decide not to participate in the bond issue and what would happen to their VAT refunds which have been long outstanding.
Imbert said: "If the bonds are tradeable and transferable and tax free, and the interest rate is so chosen so that commercial banks would purchase the bonds at par they're equivalent to cash. So if a businessman gets an instrument which is a government-guaranteed bond tax free that can be purchased by a commercial bank at par and he doesn't want to take it, I would be surprised."
Imbert announced the $3 billion worth of bonds during a public meeting in November 2019.