FINANCE Minister Colm Imbert says the payment of Value Added Tax (VAT) refunds has been delayed by cash constraints and not bureaucracy.

He made the comment in a statement issued by his ministry on January 16 in response to a daily newspaper editorial.

"Cash flow constraints have resulted in a one-month delay in completing this exercise, not bureaucracy."

Imbert said, "Accordingly, there is now sufficient cash flow to fulfil the commitment made with respect to VAT refunds to SMEs (Small and Medium Enterprises) by the end of January."

As a result of oil and gas production being below estimated levels, coupled with depressed oil and gas prices in the latter half of calendar year 2024, he continued, the revenue collected by the government in the last three months of last year was lower than expected.

Imbert said, "As a result, the government had to prioritise on its expenditure, address urgent bills first and delay VAT refunds.

He said the situation had improved with a recovery in oil and gas prices last November and December, and revenue collection stemming from the tax amnesty "has been on the up tick."

In his budget presentation in the House of Representatives last October, Imbert said government was aware that there was a significant sum of VAT refunds outstanding.

"In appreciation of the situation, recognising that companies depend on VAT refunds for cash flow, the Ministry of Finance intends once again to issue interest-bearing VAT bonds in fiscal 2025 in the sum of $3 billion with a target date for issuance of January 31, 2025."

Imbert said, "On a previous occasion, when a large quantity of VAT bonds was issued, many of these bonds were redeemed almost immediately and used by energy sector companies to pay taxes on income and profits."

This, he continued "had the effect of reducing the availability of foreign exchange in the commercial banking sector, since it is expected that energy sector companies that export all of their production, or sell their production locally in US dollars, such as upstream gas producers, would pay their taxes in US dollars."

Imbert said on this occasion, the bonds would be issued in a manner that did not create difficulties or shortages in the local foreign exchange market.

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