Last week, I made a one-day dash to Trinidad. It was an early morning flight from Ogle on LIAT. I was impressed with LIAT’s service for the short flight.
At the Port of Spain airport, I headed as normal to the doubles’ stand. It is a must for me. I love doubles with a pinch of pepper. I had two. At the doubles’ stand, the vendor refused to accept the TT$100 note. The story that came was a puzzling one, then the truth tumbled out.
The Trini government announced that because of a significant number of counterfeit bills in circulation, it was issuing new ones, complete with additional security features.
There was naturally a hue and cry. Trinis were suspicious that the reasons were but an excuse to capture persons who were hoarding ill-gotten gains.
The government gave citizens until December 31st to hand in the old notes.
However, a number of persons, including the doubles’ vendor, read that to mean that they will not be accepting the old $100 bill. Our driver clashed with him in true Trini style. It was clear that the vendor misinterpreted the directives.
Trinis were worried. There were long lines at the banks.
The stories that came out after are very clear. One man, purportedly a barber, walked into a bank with over TT$1M in cash. He worked for it, he says.
The authorities, naturally, are interested in him and the source of the money.
The Trinidad Guardian reported National Security Minister, Stuart Young, as telling reporters that persons were hurrying to spend large sums to buy jew¬ellery and cars, rather than appear before a bank teller with that money.
One bank has told the Gov¬ern¬ment that it has pushed out TT$150M (GY$4.5B) in the last two days, an¬oth¬er bank has done the same with TT$120 mil¬lion.
“Some of the ex¬am¬ples will shock any law-abid¬ing of¬fi¬cer, with per¬sons turn¬ing up with large amounts of cash and can’t ex¬plain where they got it,” Young said.
But those who con¬duct sus¬pi¬cious trans¬ac¬tions, will not be told that their trans¬ac¬tions are be¬ing mon¬i¬tored.
“We are be¬ing ad¬vised by coun¬sel every step of the way and there is a crime of tip¬ping off,” Im¬bert not¬ed. He added: “If some¬one is en¬gaged in a sus¬pi¬cious trans¬ac¬tion and looks ques¬tion¬able, the bank of¬fi¬cial is not al¬lowed to tell that per¬son.”
Young said that there are law en¬force¬ment of¬fi¬cers who are part of the process and sta-tioned where they need to be, based on in¬tel¬li¬gence.
He said the banks have been asked to open late on De¬cem¬ber 31, but main¬tained that af-ter mid¬night De¬cem¬ber 31, the notes will no longer be le¬gal.
We can remember too well, a similar initiative by India’s Prime Minister Narendra Modi.
He did not even tell his Cabinet, until the very last moment of a plan to effectively invalidate the old paper currency.
The New York Times, in August last year, reported that the government gave citizens a 50-day deadline to turn in their 500-rupee and 1,000-rupee notes to banks in exchange for new notes. After the deadline, the old notes would be totally useless.
As Indians waited in interminable lines at banks, and everyone from rickshaw drivers to real estate agents suffered a hit to their businesses and lives, Modi’s team said the pain was necessary to punish those who were hoarding ill-gotten cash.
These hoarders — including criminals, terrorists and tax evaders — would be too afraid to exchange their old bills for new ones, the thinking went, because going to banks would expose them to scrutiny and possible prosecution.
An angle touted for the initiative was that demonetization would move Indians away from cash. It would force them to use the banks more and thus allow citizens to be caught in the tax net.
In the wake of the initiative, millions of Indians opened their first bank accounts.
There are still questions about the success.
India, like Trinidad and Tobago, remains still largely a cash economy. People have been finding more ways to circumvent the system.
There was another incident during the Trinidad trip which struck at me.
I was returning and at the Duty Free Shops at the airport in Port of Spain making some purchases. One of my Trinidadian companions was upset. I paid with US dollars.
He wanted me to take back the US dollars and he would give me Trini dollars.
It jolted me back to reality.
There was a time when T&T was flooded with cash from investments and oil.
Today, the oil has run out and T&T is short of foreign currency like the US dollars.
In came Guyana, flush with investments from oil and gas.
We have much to think about. How do we limit the drain of foreign currency which the region is short of and badly wants to get their hands on? How do we capture the tax-evaders? When is a good time to rein in the money hoarders?
T&T introduced that $100 initiative with one main aim…to widen its tax net and capture those dollars.
While we will be getting our oil dollars, the lesson here is that we have to build a robust system and a diversified economy that can allow us to grow.
T&T has, fortunately for them, built a manufacturing industry that includes steel, food and drinks, and tourism. Guyana will have to be on its guard.
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