CFT has reservations about St. Maarten budget change

Chairman Raymond Gradus

THE HAGUE–The Committee for Financial Supervision CFT has some reservations about the 2017 budget amendment of Country St. Maarten and has requested further clarification from Government. The CFT advice on the June 2017 budget amendment dated July 13, 2017, which was published on the CFT website late last week, mentioned that the amendment was balanced and that it projected an increase of the budget total as well as the budgeted surplus.

  The CFT made some critical observations. “The budget amendment is indeed balanced, but the CFT concludes that it is not complete. An important omission is an overview of revenues and expenditures after the budget is amended. Without this overview, it cannot be determined whether the proposed changes are correctly processed in the budget,” CFT Chairman Raymond Gradus stated in his July 13 letter to St. Maarten Finance Minister Richard Gibson.

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  The budget amendment, submitted to the CFT late June, encompassed a NAf. 9.3 million increase of the revenues on the regular account to NAf. 487.4 million, and an increase in expenditures from NAf. 5.1 million to NAf. 463.2 million.

  In the budget amendment the expenditures of various Ministries, with the exception of the Ministry of General Affairs and the Ministry of Public Health, Social Development and Labour, were increased for the execution of policy.

  The increased collection of profit tax, higher by NAf. 1.3 million, more dividends of Government-owned entities and a settlement with utilities company NV GEBE, in total amounting to NAf. 9.3 million, would have to cover these higher expenditures.

  The budget amendment also addresses the required compensation for the deficit of the budget year 2015. The 2017 budgeted surplus of NAf. 20 million to compensate the 2010-2015 deficits will be increased by NAf. 4.2 million.

  The capital account will be decreased by NAf. 3.6 million and now will amount to NAf. 71.2 million. Especially budgeted investments at the Ministry of Education, Culture, Youth and Sport, the Ministry of Tourism, Economic Affairs, Transport and Telecommunication and the Ministry of Public Housing, Spatial Planning, Environment and Infrastructure will be adapted downwards.

  The decrease in investments at these Ministries will create space on the capital account for a NAf. 34 million investment to facilitate a much-needed upgrade of the St. Maarten Tax Office. The Central Bank of Curaçao and St. Maarten (CBCS) will be issuing a NAf. 21.7 million sinking bond at the end of this month to finance the investments.

  The CFT was critical regarding the information that was supplied on the new investments.

  The CFT further found it “insufficiently clear” whether the rent of the new Administration Building on Pond Island was included in the 2017 budget amendment. Rent has to be paid per July 1, 2017, for the Administration Building which was transferred to the Social Health Insurance SZV. For the period July 1 to December 31, 2017, Government has to pay about NAf. 2.8 million in rent to SZV.

  “The CFT is unable, based on the submitted budget amendment, to determine whether these expenditures have been included in the budget,” the CFT stated in its letter. The CFT has requested additional information on this matter.

  Overall, the CFT concluded that the budget amendment was not complete and that not in all cases consequently the same figures were supplied in the text of the national ordinance and the supporting documents. It was advised to clarify and adapt this.

  The CFT remarked that it wasn’t able to include the 2017 executing reports in its advice because it had not received these documents as a result of long-term information and communication technology problems at the St. Maarten Government. As such, the CFT could not include the realisations of revenue and expenditures over 2017 in the advice.

Source: The Daily Herald https://www.thedailyherald.sx/islands/68336-cft-has-reservations-about-st-maarten-budget-change

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