CFT wants to see more progress on outstanding matters, 2020 budget | THE DAILY HERALD

CFT board members

PHILIPSBURG–The Committee for Financial Supervision CFT said on Wednesday that St. Maarten has to make more progress on a number of outstanding matters, such as pension reforms, the reduction of healthcare expenses and the reform of the tax administration.

Despite the current political situation, CFT still urges St. Maarten to do all that is possible to take the necessary steps forward and to start the fiscal year 2020 with an approved budget.

The 2020 draft budget still shows a deficit of NAf. 24 million; therefore, approval of the Kingdom Council of Ministers will be needed based on article 25 of the consensus Kingdom law on financial supervision, CFT said. This article allows the country to deviate from the balanced budget rule under special circumstances such as the aftermath of Hurricanes Irma and Maria in 2017. CFT recommends lowering the 2020 expenses to a more realistic level and St. Maarten should start the fiscal year 2020 with an approved budget.

Regarding the 2019 budget execution, St. Maarten expects to end with a deficit of NAf. 41 million, which is lower than budgeted (NAf. 71 million).

As for liquidity, CFT indicated that the second quarter report 2019 shows NAf. 84.8 million in liquidity. To qualify for liquidity support 2019 St. Maarten also has to comply with certain conditions which are not met yet, such as the increase of civil servants’ pension age from 62 to 65 years, the change from a final-salary pension system to an average-salary pension system, and the decrease of the salaries of the members of parliament.

Also, the CFT said it understood that the finance agreements with the Dutch-financed Recovery Trust Fund and European Investment Bank (EIB) for the recovery of Princess Juliana International Airport (PJIA) are not signed yet, and emphasised once again the importance of the recovery of the airport for securing and further enhancing the country’s economic prospects.

CFT said it expects that St. Maarten should regain its 2016 pre-Irma budget levels in the near future and therefore be able to be in compliance with the Consensus Kingdom Law on financial supervision. However, to accomplish this, a number of long-standing matters need to be addressed as soon as possible.

At the top of this list is the planned reform of the tax administration. This plan was approved by the Council of Ministers last April, but its implementation has yet to start. It is anticipated that this long-awaited reform will contribute to structural growth of government revenues.

These additional revenues will enable St. Maarten to compensate for current and historical deficits and decrease the sizeable arrears, amongst other things. So far, St. Maarten has been making some payments on these arrears and has recently signed agreements with TelEm and Social and Health Insurances SZV.

Other outstanding matters are improvement of financial management and reform of the pension and healthcare system.

Regarding the reform of the pension and healthcare system, CFT requests that special attention is given to the adverse impact this may have on the government budget if left unattended. The draft legislation for the revision of civil servants’ pension was submitted to Parliament in October 2018, but is not yet approved. The increase in the AOV age from 62 to 65 still has to be passed by Parliament.

“The current lack of funds has been mentioned as the principal reason why the improvement plan for financial management has not been carried out yet. This may delay the agreed-upon date of 2021 on which St. Maarten will have obtained an unqualified auditors’ report regarding its financial statement of that year,” CFT said. CFT advises St. Maarten to exert itself to expedite implementation of the plan.

As for past financial statements, the 2016 financial statements have not received positive opinions from the auditor or from the General Audit Chamber of St. Maarten. St. Maarten intends to hire technical assistants to prepare the 2017 and 2018 financial statements, as drafting these financial statements is still outstanding. Also, the financial statements of 2015 and 2016 still have to be approved by Parliament.

CFT visited St. Maarten October 28-30 and held meetings with Governor Eugene Holiday, Minister of Finance Perry Geerlings, the Council of Ministers, the Financial Committee of Parliament, the member of the National Recovery Steering Committee on behalf of Sint Maarten, the National Programme Bureau, the Progress Committee St. Maarten, and the Law Enforcement Council.

Source: The Daily Herald