THE HAGUE–The Committee for Financial Supervision CFT responded positively to the first half-year report of 2017 of the St. Maarten Government. “St. Maarten is on the right track to realise the calculated surplus in the 2017 budget.”
The realised revenues are higher than planned and the realised expenditures are lower than calculated, and result in an improvement of the balance over the first half of this year with NAf. 18.2 million, CFT Chairman Raymond Gradus stated in a letter dated August 9 to St. Maarten Finance Minister Richard Gibson Sr.
The first execution report showed a “considerably positive” balance compared to the budget. The total realised revenues and expenditures amounted to NAf. 279 million and NAf. 214 million respectively. As a result, the preliminary balance amounts to NAf. 65 million, an increase of NAf. 18.2 million compared to the prognosis. The revenues over the first half of 2017 were NAf. 6.2 million higher than budgeted, mainly as a result of higher tax collections.
The CFT did note that the Government still had to receive some of the incidental revenues. It concerned outstanding payments of utilities company GEBE of NAf. 8 million and of the Economic Development Foundation SEO amounting to NAf. 14 million. “In the second half of 2017, a considerable amount of incidental revenues still needs to be realised in order to have the planned surplus over 2017 completely materialise.”
The CFT advised to realise the receiving of these liquid assets as soon as possible in order to safeguard the minimum budgeted deficit compensation of NAf. 20.8 million. St. Maarten has to set aside at least NAf. 20.8 million to compensate the deficits from the period 2010-2015. Receiving the funds from GEBE and SEO is also important to solve the payment arrears.
On the expenditure side it was shown that the cost of personnel was NAf. 8.3 million lower than calculated. This is mainly the result of vacancies in Government that were not filled. On the other hand, the cost for co-insuring family members was considerably higher than planned, namely NAf. 2.8 million, and it is expected that these expenses will further increase in the second half of 2017.
The CFT complimented the St. Maarten Government with its transparency for indicating in its half-year execution report a number of possible financial risks that might surface in the second half of 2017. “The CFT finds this a good development. Naming the possible risks in a transparent manner contributes to improving the correction possibilities of the budget.”
Measures were taken by Government to mitigate these possible setbacks through a first budget amendment in which some buffers were created. A second budget amendment may be necessary.
The NAf. 12 million shortages at social funds ZV/OV (sickness and accident insurance) and FZOG Fund for sickness insurance of retired civil servants were noted as a risk. In the opinion of the CFT, these shortages should be included in the plans to finance a new health insurance system.
St. Maarten has stuck to the interest norm. At the end of June 2017, the total of long-term debts amounted to NAf. 499.3 million. This is excluding the new NAf. 21.7 million loan that is currently being issued. The total amount of interest that has to be paid in 2017 is some NAf. 12.5 million.
In the first half year, St. Maarten was able to solve a large part of its payment arrears due to revenues from the settlement of the assets of former Country the Netherlands Antilles and the completion of the transfer of the new Government administration building to the social health insurance fund SZV.
In the second half of this year, St. Maarten expects to further reduce the payment arrears to a level that makes it possible to have these arrears completely cleared by the end of 2018, in accordance with the instruction of the Kingdom Council of Ministers.
Source: The Daily Herald https://www.thedailyherald.sx/islands/68617-cft-says-st-maarten-finances-on-right-track
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