Broken record

According to the Urban Dictionary a broken record is one which continually repeats the same message with little variation.

Welcome to my world.

On October 26, 2020, MinFec released a second tax relief plan: Alivio Fiscal 2, a much-awaited Fiscal Emergency Plan 2020 part 2, following up on the first tax relief plan, sprung to ease Covid-19 pains, on March 27, 2020.

As expected, it was a broad stroke plan with more unclear than clear instructions, and our helpful accountants immediately sprang into action to try provide a high level summary of the measures, described in GOA’s charts.

Now, keep in mind that in reality, nothing changes, if nothing changes.

The new measures deferred some of GOA’s income without reducing expenses, so that basically made things much worse for the medium to long term, while wasting our time.

So, on the one hand, the measures will provide tax relief for several companies, of course MinFec recognized the obvious, that many companies face real difficulties paying taxes, and thus decided to “legalize” non-payment. It will buy MinFec and GOA some goodwill, at least temporarily.

On the other hand, the package increases the budget deficits, as companies that could afford to pay, now also get tax relief. Moreover, just like the earlier wage subsidy, this may postpone the time when companies that have no hope to become profitable under the “new normal” will live on like zombies, lifeless, but breathing, delaying the necessary reallocation of labor and capital, meaning bankruptcy. 

In summary, this package continues the Kick the Can Down the Road strategy that GOA has been implementing since the start of the current deep and unprecedented economic crisis.

Afraid of taking drastic measures that are needed to rebalance the budget and restructure the economy, GOA keeps kicking the can down the road.

With the new measures, we will see reduction of some very short-term symptoms, as MinFec applies a Band-Aid to the severed legs of our economy. We are bleeding to death. A band aid will not do the job.

And to date, as you know, nothing has been done to stop this bleeding i.e., cut GOA’s expenses.

Until we reduce burning up of money significantly, and earning more value for whatever is burnt, we are spinning wheels.

We should also keep in mind that Curacao is getting ready to sign the aid agreement with the Dutch, and so far no definitive Yes or No from Aruba.

I believe that our financial supervisory board will come up with the magic number, within a week, of how much money the Dutch will be willing to lend us so we could conclude 2020 with our bills paid.

Once that magic number is pronounced it will be incorporated into the final aid document, which will be discussed on an upcoming Friday during the Dutch cabinet weekly meeting.

How much longer will the Dutch allow for umming and ahing, after CAft hands down the verdict and the papers are drawn, in view of the fact that that Curacao would have already signed?

Your guess is as good as mine.

I would put everyone on notice, and give them a deadline.    

Are we running the risk of the offer being taken off the table?

 

 

Share on:

October 28, 2020
Rona Coster