PHILIPSBURG–The Council of Ministers has approved the 2018 budget, which has a deficit of almost NAf. 255 million, Finance Minister Michael Ferrier said on Wednesday, noting that the country’s liquidity situation is “tight.”
Ferrier told reporters at the weekly Council of Ministers press briefing that the deficit was created due to increased expenditures and a drop in income as a result of the effects of Hurricane Irma.
As the budget has a deficit, the law on Financial Supervision requires St. Maarten to request approval from the Kingdom Council of Ministers to deviate from having a balanced budget. Ferrier said a letter seeking approval has been sent to the Kingdom Council of Ministers.
Government is also in contact with the Committee for Financial Supervision CFT, whose members are “trying to help us navigate and do things in the right fashion.” Ferrier is hoping the country does not receive an instruction from the Kingdom Government. He hopes the budget will complete the necessary trajectory such as being handled by the Council of Advice and will be tabled in Parliament to be ready by March 1. “We are still looking at March 1 as target date to have the budget completed,” he said.
Ferrier said the country is in a “tight” situation when it comes to its liquidity. St. Maarten has not yet received the promised liquidity support from the Netherlands for the 2017 budget.
“We have requested it. We are trying to do all we can to solve that issue. It has to do with dealing with the World Bank. Also, the liquidity support will come out of the 550 million euros that has been allocated to us,” Ferrier said noting that authorities are engaged in talks with World Bank representatives who are currently in the country. “We are trying to improve our liquidity also by controlling cost and finding ways to reduce waste.”
One of the measures being taken is switching off the lights in the new Government Building at night. “We feel that every civil servant must do their utmost to try to cut down on expenses so that we have a chance to improve liquidity,” he said.
Ferrier said he has had meetings with several entities such as Social and Health Insurances SZV and Government Accounts Bureau SOAB, amongst others, over the past week. Efforts are now being made to work on the country’s credit rating with Moody’s.
“Every country wants the best possible credit rating to be able to borrow money at a decent interest rate – the higher your credit rating, the better,” Ferrier said, noting that a good rating will enable the country, private sector entities and Government-owned companies to borrow at attractive interest rates. The amount of funds Government has available affects the Moody’s credit rating. Ferrier believes that 550 million euros reconstruction funds from the Dutch government can assist in this regard.
“We don’t know which part is a loan and which part would be a grant and under what conditions we will get the 550 million. The more we get as a grant, the better it would be with our Moody’s rating, because if we have a better cash flow, we will get a higher credit rating. … It’s another good reason for as much as possible of the 550 million to be given as a grant rather than as a loan,” he said.
In an unrelated issue, Ferrier said one of the challenges being encountered in the Ministry is the information communications technology (ICT) system, which affects the submission of timely reports in the Finance Ministry and the ability to efficiently determine assessments and collect taxes.
“We have identified several problems and we will continue to do what we can to improve the system and make changes where changes are due,” he said.
Source: The Daily Herald https://www.thedailyherald.sx/islands/73051-govt-approves-budget-liquidity-situation-tight