In lending a hand of support to small and medium enterprises (SMEs) in distress owing to the current economic shutdown, Finance Minister Colm Imbert struck the correct tone and gave businesses hope that meaningful assistance could soon be on the horizon.
However, the overall tenor of Mr Imbert’s mid-year review on Wednesday was one that entrenched the Government’s stubborn approach of trying to reform supposedly indisciplined businesses while being compassionate. If kindness was shown by the $3billion budget supplementation, it is a kindness that kills.
There was some good news in Mr Imbert’s brief presentation.
The minister made plain the Government will not approach the International Monetary Fund (IMF). Linking the IMF with structural adjustment, he said there will be no retrenchment and subsidies will not be not be removed “at this time.”
“Since our reserves are still US$ 7 billion and the Heritage and Stabilisation Fund stands at US$5.7 billion, we have more than sufficient foreign exchange at this point in time, and therefore there is absolutely no reason for us to go to the IMF,” Mr Imbert said.
Yet the minister also made plain cost-cutting exercises continued, and pointed to the Water and Sewerage Authority (WASA) as one area being targeted. How such cutbacks can be made without affecting staffing levels or salaries is unclear.
Mr Imbert also assured funding for the Ministry of Health is virtually guaranteed, with $107 million already allocated for covid19 vaccines to cover 85 per cent of the population – which is good news, given how crucial the inoculation programme is to restarting the economy.
Yet the minister returned to the tired old themes when it came to the issue of emergency support for individuals and businesses who have now been hit with a state of emergency atop more than an entire year of depleted revenue and income.
SMEs yesterday got a serious reprimand from him.
“They are running business on a day-to-day basis,” Mr Imbert said. “We as a government must assist these people, so we are, and we are going to develop...an outreach programme. One of the basic things a business requires is proper accounting.”
Nobody can deny businesses should follow best practices with regard to these issues. But Mr Imbert cannot pretend that the issue of accounting and tax compliance is something that has arisen overnight. They are long-term issues that existed before the sudden, unprecedented events of 2020.
It cannot come as a surprise that SMEs do not have the same accounting practices as larger, more well-resourced companies, some of which, incidentally, many of which also have outstanding issues on their books.
The minister said the government would extend the loan facility programme being offered through banks – which have set a great deal of the criteria – but will increase state backing of such loans to 100 per cent. The programme will now run until the end of this year.
But who will be willing to access this programme, if it is meant not as charity but as a means to force change?