CFT says extra investments require realistic budgeting

PHILIPSBURG–Plans of the (previous) St. Maarten Government to make additional investments in the areas of health care, justice and the Tax Office are justified, but need to be budgeted in a responsible and realistic way, Committee for Financial Supervision CFT stated in a recent letter.

The letter, which was dated October 26, and published three weeks later, relates to the first draft amendment to the 2015 budget of the St. Maarten Government earlier in October. In that letter to CFT, government indicated that it anticipated considerable additional expenditures in the areas of health care, justice and the Tax Office.

The additional expenditures meant that government would be exceeding the NAf. 445 million on the expenditure side of the 2015 budgeted. It concerned, among other things, the expansion of the Pointe Blanche Prison, and investments in St. Maarten Medical Centre and the Tax Office.

CFT didn’t doubt the fact that these investments would benefit the St. Maarten people, as stated by the government, but the Committee did point out that these expenditures had to be financed in a structural and realistic manner, and also correctly incorporated in the multi-annual budget.

CFT remarked that the solving of the issues, as ordered in the September 8 decision of the Kingdom Council of Ministers regarding the 2015 budget, were also of great importance to the well-being of the St. Maarten people.

The instruction orders St. Maarten to compensate the budget deficits incurred between 2010 and 2014 in the budgets of 2015 up to and including 2018, solve its payment arrears, fully incorporate the health care and pension expenditures in the 2015 budget, as well as in the multi-annual budget, and to take measures to achieve an attainable pension and social security system in order to avoid new payment arrears.

CFT Chairman Age Bakker stated that the Committee acknowledged and appreciated St. Maarten’s ambitions to solve the issues, and to comply with the conditions of the instruction. Government and CFT are basically on one line regarding the issues and solutions, but they do differ where it comes to the additional revenues that St. Maarten has anticipated for the coming years.

According to CFT, the calculated additional increase of structural revenues of 30 per cent in the period 2016-2018, mostly through higher tax compliance, is “very ambitious” and “practically unachievable.” CFT advised government to assume a more modest approach in this aspect.

CFT was happy to note that the St. Maarten Government was close to reaching an accord with the General Pension Funds APS and the Social and Health Insurance SZV on the payment arrears. Government expected to reduce the debt to APS and SZV by about NAf. 100 million by the end of the year, and that the remainder would be paid in the next three years. This would be in line with the instruction of the Kingdom Government.

Government has been making efforts to comply with the other demands of the instruction before the end of the year. One term of the instruction has already been complied with: the St. Maarten Parliament on November 9 approved a law proposal to increase the AOV pension age in St. Maarten, which has been increased from 60 to 62 as per January 1, 2018.

The CFT Chairman reconfirmed in his letter that the Committee could advise the Kingdom Government to undo the temporary freeze on acquiring loans for capital investments, if the country complied with the conditions of the instruction. CFT has advised the St. Maarten Government to utilise the NAf. 38 million in loans left over from 2014.

St. Maarten has appealed the September 8 decision of the Kingdom Council of Ministers. The hearing of the Council of State to handle the request of the St. Maarten Government for a temporary provision will take place in The Hague this Thursday.

Chairman Bakker also stated in his letter that CFT was disappointed in the point of view of the St. Maarten Government that the Committee lacked a constructive cooperation. CFT strived to be government’s “trusted advisor” besides being the authority in charge of financial supervision of the countries Curaçao and St. Maarten.

Source: The Daily Herald CFT says extra investments require realistic budgeting