Ferrier to MPs: Budget ‘not a pretty picture’

PHILIPSBURG–The 2018 draft budget is “not a pretty picture” and is at no stretch (of the imagination) an adequate budget that can meet the needs of the St. Maarten population, Finance Minister Mike Ferrier told Parliament on Thursday morning when he tabled the country’s first deficit budget in a Central Committee sitting.

  The draft budget is NAf 197 million in the hole with income (from taxes and other fees) standing at NAf 303.4 million and expenditures at NAf 505.5 million. This leaves “a gaping hole” to be filled by, hopefully, cost-cutting measures.  

  The original budget deficit stood at NAf 257 million. That amount was reduced to current NAf 197 million. “We are still in a huge, huge hole” even with the reduction, Ferrier pointed out.

   On the income side, government has projected to collect NAf 234.8 million in taxes, NAf 12.9 million in permit fees, NAf 32.5 million in concession fees, and NAf 22. 9 million in other income.

  Personnel cost continues to be the lion’s share of government’s expenditure, standing at NAf 199.8 million. That is followed by cost for goods and services NAf 110.7 million, social benefits NAf 58 million, depreciation NAf 14.1 million, subsidies NAf 101.7 million, study financing (so-called scholarships) NAf 4.1 million and bank and interest charges NAf 14.1 million.

  Personnel cost in 2017 stood at NAf 198.9 million. For that same year, goods and services cost NAf 98.5 million, depreciation NAf 8 million, subsidies NAf 99.7 million, study financing NAf 4.1 million, banks fees and interest NAf 13.4 million and social benefits NAf 38.3 million. The about NAf 20 million increase in social benefit pay-out for 2018 compared to the previous year is connected to growing requests for benefits and medical aid requests.

  To survive and not go bankrupt in the still recovering Hurricane Irma-impacted economy, Ferrier said: “We are going to have to pull out all of the stops to keep from going bankrupt.”

  With “a combined effort of all, St. Maarten will rise again,” he said, issuing a call to Member of Parliament to choose “collaboration rather than confrontation” to get the budget approved and rev up the economy.

  The aftermath of Irma requires “we come together and truly make a difference for this island nation … We have all been touched by Irma.”  

  He added: “All we need is to be able to shift our sluggish post-Irma economy into a higher gear in order to pick up speed again.”

  To gain speed, Princess Juliana International Airport must be repaired and up and running “on short notice.” Major resorts “must be repaired and back online and as many as possible of the small, medium and large businesses must be able to access soft loans with low interest “to see them through 2018 and deep into 2019.” The “ultimate goal” of the latter is “to create employment for our citizens and produce tax revenues for this and future governments.”

  Speaking of the recovery aid allocated by the Dutch Government to St. Maarten, Ferrier said the country was “delighted” to receive the 550 million euros assistance to aid its efforts to build back better, “but taken aback” that it was subjected to months-old pre-Irma conditions.

  The good news, though, is entire 470 million euros/US $526 million allocated to the World Bank-administered recovery trust fund is “a grant, a gift to St. Maarten and not a loan,” said Ferrier. The trust fund amount will be disbursed to St. Maarten in tranches over the coming three-and-a-half years.

  Irma has cost more than US $2 billion in physical damage and economic losses to St. Maarten. That World Bank estimate has been corroborated by the International Monetary Fund (IMF).

  “So even when we receive the eventual last euro of this trust fund … we will still be US $1.5 billion short to complete the recovery, barring any further disasters,” Ferrier said.   

  “True St. Maarteners are no beggars and I dare say that eventually even without any help from outside because of the previously-mentioned resilient spirit of our people, St. Maarten/St. Martin would get back on its feet. It will only take a lot longer because of our economy of scale,” Ferrier said.

  The Council of Ministers is still to approve Ferrier’s list of 37 cost-cutting proposals aimed at giving the budget more room. Measures that are approved will be applied to future budget amendments.

  The minister welcomes any further cost-cutting suggestions from the public and the civil service to further reduce the country’s sizeable budget deficit.

  Ferrier along with the other members of the Council of Ministers were in Parliament for the tabling of the draft 2018 budget. The sitting only saw Ferrier give an elucidation on the draft.

  The deliberations on the draft are set to resume on Wednesday, May 2, after the five-day King’s Day/Carnival/Labour Day long weekend holiday span.

Source: The Daily Herald https://www.thedailyherald.sx/islands/76118-ferrier-to-mps-budget-not-a-pretty-picture