CFT: ‘Immediate action’ needed on 2017 budget

PHILIPSBURG–The Government of St. Maarten needs to take “immediate action” to provide information regarding the country’s 2017 budget, outgoing Committee for Financial Supervision CFT Chairman Age Bakker told reporters at a press conference on Thursday.

A recent virus attack on Government’s servers has affected the budgetary process.

In a press release issued following the press conference, CFT said insight into the current financial state of affairs due to Information Technology (IT) problems in the financial administration “is lacking.” The CFT board met with the Council of Ministers and Members of Parliament (MPs) recently about St. Maarten finances and reported about the meetings at the press conference.

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CFT said the annual report for 2016 is yet to be composed which means there is still uncertainty about the expected positive result of NAf. 26.4 million. “Furthermore, no progress report has been submitted to the CFT for 2017 yet,” it was stated in the release. “Immediate action by Government is necessary to have comfort that St. Maarten still meets the requirements of the targeted instruction.”

Based on the preliminary fourth quarter report, St. Maarten expects a budget surplus of NAf. 26.4 million for 2016. This surplus, CFT said, would be sufficient to compensate according to plan for deficits accumulated in previous years. CFT says St. Maarten should expeditiously compose the annual accounts for 2016 and have them audited by an accountant. “The current numbers are preliminary and due to the ongoing IT problems, possibly subject to change. The annual accounts should provide more certainty regarding the result of 2016,” CFT said.

“It is important that St. Maarten Government takes immediate action to provide the necessary information about the execution of the budget,” Bakker was quoted as saying.

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 IT problems, St. Maarten was also unable to provide the report over the first quarter of 2017. Without the quarterly reports, neither the Government of St. Maarten nor CFT will be able to adequately monitor whether the budget income has been realised. “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.”

CFT said it had approved a request for a NAf. 30 million loan for capital investments received on April 12. NAf. 21.6 million of the requested amount was already budgeted for, so NAf. 8.4 million needed to be formally incorporated in the budget through a budget amendment. “Since amending the budget is a lengthy process, St. Maarten Government decided to already request for NAf. 21.6 million through the Central Bank of Curaçao and St. Maarten. The loan will provide an economic impulse for St. Maarten,” it was stated in the release. CFT said it discussed with the Minister of Finance, plans to modernise 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 said it also spoke about the ongoing reform of both the retirement system and health care system. On April 13, CFT said it advised St. 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 finalised 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. Government intends to invest in IT solutions which should help modernise financial administration. In addition to the meetings, CFT had with the Council of Ministers and Parliament, CFT also met with Governor Eugene Holiday, the St. Maarten Hospitality and Trade Association (SHTA) and the general pension fund administrator APS.

A visit was also paid to one of the projects partly financed by the pension fund – Rain Forest Adventure. CFT said this project will add to the tourist attraction packages offered in St. Maarten.

Bakker thanked all parties for their cooperation these past several years and looked back at a successful last visit to St. Maarten as CFT Chairman. “Much has been accomplished in the past years and I am confident that St. Maarten can combine financial discipline and a healthy economic environment which is attractive for foreign investors,” Bakker was quoted as saying in the release.

Source: The Daily Herald https://www.thedailyherald.sx/islands/67309-cft-immediate-action-needed-on-2017-budget

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