PHILIPSBURG–The Committee for Financial Supervision CFT said on Wednesday that it looks forward with interest to receiving the revised 2019 budget plus the plans to reform the tax authorities and get the financial management in order. The CFT discussed the revision of the budget with Finance Minister Perry Geerlings and has made an appeal to finalise the plans soon.
St. Maarten has been working on a revised budget for 2019 since the beginning of this year. In line with earlier advice from the CFT, the budgeted expenses have been adjusted downwards, which resulted in a lower deficit.
To turn the deficits into structural surpluses, St. Maarten intends, among other things, to reform the tax office and has drawn up a draft plan for this purpose. The CFT acknowledged the need to strengthen the tax office so that tax compliance will increase, allowing for the government revenues to rise further. CFT has advised St. Maarten to take the necessary steps so that the implementation can be started shortly. This advice also applies to the plan to improve financial management.
St. Maarten promised in October to soon submit an improvement plan that will lead to an unqualified auditors’ report on the 2021 financial statements.
CFT has called for short-term cost-saving measures for the healthcare and pension expenditures. CFT has expressed its disappointment that the promised adjustment of the pension legislation was not implemented prior to January 1, 2019. The legislation was presented to Parliament in time in 2018, but nonetheless has not yet led to decision-making.
As regards its payment arrears, it is important that the St. Maarten government reaches payment agreements with the most important creditors – the Social and Health Insurance SZV and General Pension Fund APS, which in turn will have to be complied with.
CFT has again requested attention for completion of the accountability process of the previous years. The financial statements for 2013 and 2014 have been submitted to Parliament in 2018, but have not yet been approved. The 2015 and 2016 financial statements have not yet been submitted to Parliament. The financial statements of 2017 and 2018 still have to be drawn up.
Figures for 2018 show a lower deficit than budgeted. This is mainly a result of higher revenues compared to the budget; especially tax revenues.
CFT said the deficit is admittedly decreasing; nevertheless, St. Maarten will need liquidity support for 2018 and 2019. St. Maarten has asked the Netherlands for this liquidity support, which will increase the ratio of debt to gross domestic product (GDP).
An intended loan for capital expenditures and possible other financing matters may also affect the course of the debt-to-GDP ratio, said CFT.
CFT will monitor the development of the debt-to-GDP ratio with the aim to keep it at a sustainable level.
CFT visited St. Maarten February 11-13 and held meetings with the Governor, the Council of Ministers, the Council of Advice, the Director of the National Recovery Programme Bureau, and SZV.
Source: The Daily Herald https://www.thedailyherald.sx/islands/85200-cft-swift-action-needed-towards-balanced-budget
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