GREAT BAY – The European Union’s contribution to the upgrade of Dutch Quarter is in peril. The EU made €5 million available for the sewage project in the district on the condition that St. Maarten would contribute 4 million guilders to it. “This money is for the time being not available in the capital investment budget,” the ministry of finance writes in its execution report over the first half of 2017. Funds from the tenth European Development Fund expire on December 5 of this year.
The government signed a financing agreement with the EU on December 5, 2013 in Brussels. The press department for International Cooperation and Development at the European Union told this newspaper already in 2015 that “the operational implementation of the available funds shall be concluded within four years of the signing of the financing agreement. This means the deadline is on December 5, 2017.”
The execution report furthermore notes that the EU is prepared to invest another 7 million in St. Maarten from the eleventh European development fund but whether that will become a reality is also uncertain: “For now the co-financing from the country is lacking,” the report states.
It is however not all bad news in the report from the finance ministry. Revenue over the first half year is 6.2 million guilders above budget and expenditures are 12 million guilders below budget.
Tax revenue over the first half year was 7.9 million higher than budgeted, fees and concessions were 1 million higher, predominantly due to higher license fees from the Central Bank. Revenue from permits was 0.4 million below budget, due to less revenue from work permits and construction permits. The government expects that revenue from these permits will improve in the second half of the year.
The lower expenditures are mainly due to lower personnel costs: 8.3 million. The ministries also spent 3.6 million less on goods and services. Expenditures for social benefits were 2.8 million higher, due to not-budgeted costs for the co-insurance of family members.
The government is not out of the woods yet for 2017 and the report highlights the risks it is facing. The social funds ZV/OV (sickness and accident insurance) and FZOG (sickness insurance for retired civil servants) that are managed by SZV are battling an annual deficit of 12 million guilders; the country is the guarantor for these deficits – but they are not budgeted. “Without far-reaching measures by the minister of public health, among others the implementation of a National Health Insurance, the country’s debt to SZV will increase again,” the report warns.
The Ministry of Education is still battling the cost of school bus transportation. “Without far-reaching measures from the ministry, this problem will continue to repeat itself,” the report states. So far, the ministry has spent 2.2 million guilders on school bus transportation, almost 589,000 guilders above budget, but well below the 3.1 million it spent in the first half year of 2016.
The government expects to receive this year 11 million guilders in dividend from two government-owned companies. Gebe will contribute 8 million and TelEm 3 million.
The budget also projects 14 million guilders in revenue from SEO, the Economic Development Foundation. SEO has recently signed an agreement with St. Maarten and Curacao about its dissolution and about the settlement of its assets. In June St. Maarten received a first payment of 8 million; later this year a second payment of 3.8 million is to follow.
A loan SEO entered into with the Simpson Bay Lagoon Authority Corporation (SLAC) will be transferred to the country bringing the total income from this source to 14 million.
The government furthermore signed an agreement with utilities company Gebe to settle the profit taxes the company is due against the government’s outstanding invoices.
The half-year report furthermore shows that the costs for managing the landfill on Pond Island have gone down by close to half a million. Over the first half year of 2016, the government paid a bit more than 1.8 million guilders for this; this year the total cost is 1.35 million, slightly above the budgeted 1.28 million.
On the other side of the equation, the government spent almost 300,000 guilders more on road maintenance (1.4 million), 367,500 more on electricity (1.3 million) and almost 170,000 more on water (421,724 guilders).
The reaction from financial supervisor Cft to the half-year report was positive. “St. Maarten is on the right track to realize the surplus in the 2017 budget,” Cft-chairman Raymond Gradus wrote to Finance Minister Richard Gibson.
The Cft was also pleased with the report’s chapter about the risks the country is still facing. “The Cft compliments St. Maarten for this transparency.”