Parting CFT Chairman Age Bakker: “More insight necessary in Sint Maarten’s budget realizations”

cftboard29062017St. Maarten must fix its ICT issues. Financial Statements are needed.

PHILIPSBURG:— The board of the CFT headed by Age Bakker told members of the media on Thursday that the Board of financial supervision Curaçao and Sint Maarten (CFT), that is chaired by Age Bakker spoke with the Council of Ministers and members of Parliament about Sint Maarten finances. It should be noted that this is the last meeting Bakker held with the government of St. Maarten and also the media as his term expired.
Bakker said that insight on the current financial state of affairs due to ICT problems in the financial administration is lacking. The annual report for 2016 has yet to be composed which means there is still uncertainty about the expected positive result of ANG 26,4 million. Furthermore, no progress report has been submitted to CFT for 2017 as yet. Immediate action by government is necessary to have comfort that Sint Maarten still meets the requirements of the targeted instruction.

Based on the preliminary fourth quarter report, Sint Maarten expects a budget surplus of ANG 26,4 million for 2016 Bakker said. That surplus would be sufficient to compensate according to plan for deficits accumulated in previous years. The CFT stressed that Sint Maarten should expeditiously compose the annual accounts for 2016 and have them audited by the accountant. The current numbers are preliminary and, due to the ongoing ICT problems, possibly subject to change. The annual accounts should provide more certainty regarding the result of 2016. “It is important that Sint Maarten government takes immediate action to provide the necessary information about the execution of the budget”, Age Bakker stated during the meeting with the Council of Ministers.

In its advice on the 2017 budget, CFT concluded that the budget was in line with the targeted instruction. However, CFT also stressed the importance of closely monitoring the budget since it relies heavily on incidental income. Due to the ICT problems, Sint Maarten was also unable to provide the report over the first quarter of 2017. Without the quarterly reports, Sint Maarten government nor the CFT will be able to adequately monitor whether the budget income has been realized. Therefore, assessing whether the execution of the budget remains in line with the targeted instruction is difficult. This also has effects whether or not a future request for a loan could be approved by CFT.

A request for a ANG 30, 0 million loan for capital investments was received on the 12th of April and was approved by CFT. ANG 21,6 million of the requested amount was already budgeted for, so ANG 8,4 million needs to be formally incorporated in the budget through a budget amendment. Since amending the budget is a lengthy process, Sint Maarten government decided to already request for ANG 21, 6 million through the Central Bank of Curaçao and Sint Maarten. The loan will provide an economic impulse for Sint Maarten. CFT discussed with the Minister of Finance plans to modernize and upgrade the tax office. It was agreed that a draft business plan will be presented to CFT shortly in support of a request for a loan. CFT will look at the request in a constructive manner and base its opinion on an expert second opinion.

During its visit, CFT also spoke about the ongoing reform of both the retirement system and healthcare system. On April 13, CFT advised Sint Maarten to establish and implement the necessary legislation for the reforms by the end of 2017. Taking the recent progress into account, this will be possible for the reform of the retirement system. The national ordinance regarding the National Health Insurance, however, will also have to be finalized this year, after which actual implementation will take place.

During the meetings with government, it was emphasized that financial management is far from being up to standard. The government intends to invest in IT solutions which should help modernize financial administration. In addition to the meetings CFT had with the Council of Ministers and Parliament, CFT also met with Governor Holiday, the Sint Maarten Hospitality & Trade Association and APS. A visit was paid to one of the projects partly financed by the pension fund, the Rain Forest Adventure. The project will add to the tourist attraction packages offered in Sint Maarten. Age Bakker thanked all parties for their cooperation these past several years and looked back at a successful last visit to Sint Maarten as chairman of the CFT. “Much has been accomplished in the past years and I am confident that Sint Maarten can combine financial discipline and a healthy economic environment which is attractive for foreign investors.”

CFT will not give positive advice for the New General Hospital unless NHI is implemented and a proper business plan is in place to ensure Quality of Care and sustainability.
Bakker also stated that he held meetings with Minister of Health Emil Lee who is trying to secure a loan for the New General Hospital, however, Bakker said that the CFT cannot give a positive advice on this because St. Maarten has to first comply with the instruction one being having the NHI in place by the end of 2017.
Bakker said that having a new building is not a hospital but the NHI and proper business plan has to be submitted to the CFT for them to review before they could give an advice for a loan at low interest rates. He said the Minister of Health is working hard to comply and to be able to build the new hospital and as such he advised the Prime Minister of St. Maarten William Marlin that he and the other Ministers have to get on board to support the Minister of Health in getting things done in the right way in order to provide proper healthcare that is also sustainable.
Bakker said that the only way the Netherlands could only give loans to St. Maarten after receiving an advice from the CFT. Bakker also stated that they have to see if giving a separate loan for the construction of the New General Hospital is feasible since they already approved a loan of NAF30M for St. Maarten. Bakker said the only way the CFT will consider a loan for the New General Hospital is St. Maarten fully comply with the instruction it was given. He said that the CFT cannot judge a business case if they do not know the financial environment of the institution. He made clear that SMMC (New General Hospital) is not only about bricks but also the quality of care that is provided all of which has to be coherent. He said if the Government of St. Maarten wants cheaper financing they would have to request it and also submit all that is needed in order for the CFT to get a second opinion on the business case. He said that as long as the NHI is not in place then the CFT will not be able to judge or take a decision on the loan.
Bakker said that even though the Minister of Health Emil Lee has this setback he is busy working with SZV, APS, and bankers to secure a loan for the construction of the New General Hospital.
Asked if he believes that St. Maarten could sustain the National Health Insurance (NHI) as all stakeholders on St. Maarten is against it due to how it is structured. Bakker said St. Maarten has been working on the NHI for years and that is why they were instructed to have it implemented by the end of 2017. Besides that, the CFT chairman said that the private sector and other stakeholders are against the NHI because they were not properly informed. Bakker said that the current healthcare system is not sustainable its way too expensive thus there must be a reform of the healthcare system. Bakker said St. Maarten chose the NHI and based on his experience the NHI is better and it’s a system that works better while it is also sustainable. He said that the Minister has to include an element “Own Risk” in the NHI would bring some discipline in the system and get the private sector on board. He said when they discussed with the SHTA who still have a number of questions the CFT realized that these questions arise because of a lack of information. He said after their discussions they realized that there is a fear that government employees will be treated better than those in the private sector, something he said is not in the legislation but that fear exists. Bakker said that what to solve this problem and to eliminate that fear then government must include that government and the private sector will pay the exact amount in premiums and all employees whether government or from the private sector that they all have the same healthcare package. He said he does believe that all the hiccups with the NHI can be solved but it is also important that the entire Council of Ministers are on board, he said in their meeting the CFT advised the Prime Minister William Marlin takes the responsibility of getting the NHI implemented.
Asked if SZV should finance the New General Hospital and risk the pension funds, while Bakker was not too comfortable answering the question he did say that this completely up to SZV and APS to take decisions based on their considerations. He said both entities need to use the advice of the investment committees that have to take into account the yield, risks, the public interest but also need to take into consideration the future of the pensioners.
Addressing the ICT issues and if the CFT will use some sort of empathy towards St. Maarten since ICT malware have affected several countries including the Netherlands Bakker said the CFT already showed empathy with St. Maarten but St. Maarten must address the ICT issues, government must get the right ICT professionals to fix the problems because they simply cannot function or govern without proper data. He said while they do not have the financial statements from St. Maarten for the first quarter they are quite comfortable with St. Maarten’s progress since they do have the same income for the first five months of 2017 which is exactly the same amount as 2016 (NAF. 210M). Bakker said that St. Maarten has to comply at all cost because they must submit their financial statements for the first quarter of the year due to the ICT issues. He said the Minister of Finance Richard Gibson Sr. has worked hard and has shown progress with the country’s budget. Bakker said that when he met with the Council of Ministers the Minister of Finance assured them that he is doing everything possible to submit a combined report for the year 2107 by the end of July to early August.

Source: St. Martin News Network
Parting CFT Chairman Age Bakker: “More insight necessary in Sint Maarten’s budget realizations”