Irion presents NAf. 613 million budget with NAf. 241m deficit | THE DAILY HERALD

Finance Minister Ardwell Irion (centre) flanked by Prime Minister Silveria Jacobs (left) and Justice Minister Anna Richardson (right).

PHILIPSBURG–“We recognise that the 2021 budget needs much improvement,” Finance Minister Ardwell Irion said on Thursday as he presented the NAf. 613 million draft budget to Members of Parliament (MPs) during a meeting of the Central Committee.

 The projected expenses in the draft budget stand at NAf. 613.1 million, while income is projected at NAf. 371.3 million with a deficit of NAf. 241.7 million, compared to last year’s budget which stood at NAf. 570.9 million for expenses, NAf. 354.7 income and a NAf. 233.8 million deficit.

  The meeting started with Irion giving an overview of the budget and of his ministry for this year. MPs were then allowed to ask questions. Several other ministers then provided an overview of the budgets for their respective ministries followed by questions from MPs. The meeting was adjourned late last night and will continue at 10:00am today, Friday.

Gov’t income

  Of the NAf. 371 million in income government hopes to collect, a total of NAf. 307.5 million is taxes (compared to NAf. 288.1 million collected last year); NAf. 11.1 million is permits fees (NAf. 11.2 in 2020); NAf. 36.4 million is fees and concession (NAf. 29.7 million in 2020) and NAf.16.2 million is “other income”) (compared to NAf. 25.7 million in 2020).


  In the expense category, government’s biggest expenses were listed as subsidies and grants which stand at NAf. 202 million, personnel cost at NAf. 190 million and material cost – goods and services NAf.158 million.  Other expenses are social security NAf. 26 million; interest NAf. 12 million; depreciation cost NAf. 9 million; consultancy fees NAf. 7 million (up from NAf. 5 million last year), unforeseen cost NAf. 6 million, and scholarships and allowances NAf. 4 million.

  A total of NAf. 23 million will go to Parliament and high councils (up from the NAf. 21 million last year); NAf. 76 million to the Ministry of General Affairs (down from the NAf. 79 million last year); NAf. 166 million to the Ministry of Finance (up from the NAf. 139 million in 2020); NAf. 82 million for the Ministry of Justice (up from the NAf. 81 million last year); NAf. 118 million for the Ministry of Education, Culture, Youth and Sports (up from the NAf. 115 million last year); NAf. 86 million for the Ministry of Health, Labor and Social Affairs (up from the NAf. 76 million last year); NAf. 22 million for the Ministry of Tourism, Economic Affairs, Transport and Telecommunication (same as what was received last year); and NAf. 40 million for the Ministry of Public Housing, Spatial Planning, Environment and Infrastructure VROMI (up from the NAf. 37 million received last year).

  COVID-19-related cost stands at NAf. 127,939,320.


  Irion told MPs that the draft 2021 budget is based on the approved budget amendment of 2020. The revenue was calculated based on the realised figures from 2020 adjusted with the International Monetary Fund (IMF) projections. IMF forecasts indicate a decrease in gross domestic product (GDP) of more than 25 per cent in the first three quarters and recovery starting in the fourth quarter.

  The stimulus programme, he said, is budgeted for nine months (until the start of the new high season). However, the execution is very much dependent on liquidity (support). The draft budget also includes additional expenses that are the result of the COVID-19 pandemic.

  Also, personnel cost is adjusted as follows: reduction of 25 per cent for the members of parliament, ministers; reduction of 12.5 per cent for civil servants and employees of subsidised institutions and government entities such as foundations, schools and non-governmental organisations (NGOs).

  In elaborating on the financial consequences of the country packages that were taken up in the budget, he said the pension legislation was approved and the changes were implemented as of July 1, 2020. This led to a substantial deficit in the 2021 budget, and as such authorities are unable to comply with Article 15 of the Financial Supervision Act RFT. As a result, exemption from this article was requested and granted by the Kingdom Council of Ministers (RMR) based on Article 25(1) of the RFT.

  “We recognise that the 2021 budget needs much improvement, and the government is determined to make much-needed improvements to the 2022 budget and further automate the budgeting process to make it more effective,” Irion said. “The extent to which gains remain primarily dependent on the availability of funding for priority projects at the Ministry of Finance, but these improvement plans are part of the country package within reach of St. Maarten.”

  He said strengthening of financial supervision is part of the country package which includes the implementation of proper financial management and tax reforms. The backlog was reduced in 2020 and the financial statements for 2017, 2018 and 2019 are drafted and proceeded. New vacancies are taken up in the personnel cost as well.

  “When you exclude the cost for new vacancies and take into account the freezing of increments, reduction of vacation days and the use of unpaid vacation allowance, the 12.5 per cent is incorporated.”

  Housing cost is currently NAf. 1.78 million per year. The financing cost for the new building will be NAf. 150,000 per year (this investment will be recuperated within 10 years).

  Based on the IMF projections the country expects four per cent GDP growth in 2021 which will result in a slight increase in revenues, Irion said. “The projection of our GDP according to the IMF shows that our budget will balance again in 2024/2025. This means another two years of deficits are projected.”

  He explained that the budget post “unforeseen” has an amount of five million budgeted. These funds include a provision awaiting the decision by the constitutional court on the National Ordinance pertaining to the adjustments related to the personnel cost.

  Personnel cost has decreased from budget 2020 due to a number of factors, but has increased in relation to realised figures of 2020. The increase is in direct relation to critical vacancies for a number of ministries in association with the personnel needed for the implementation of the country package. Adjusted personnel cost also includes 25 per cent political authorities, 12.5 per cent civil servants and employees of subsidised institutions, other government entities, he said.

  The increase in material cost, goods and services is due to an additional NAf. 4 million for expenditures consisting of improvements in financial management and the tax authorities, one million for courses and training in justice, bus transportation and various projects under the Ministry of Education for 3.4 million, amongst others.

  A number of cost-cutting measures were immediately implemented in 2020, including the switch to fuel-cards whereby in real time government can analyse and adjust fuel usage per ministry. The switch from post-paid to prepaid was also introduced whereby phones are topped up on a monthly basis, which is determined by function. This has allowed for better management of phone usage, Irion explained.

  With the completion of the Bureau Telecommunications and Post (BTP) building in its final stages and moving of various satellite departments into the BTP building, the government expects to save, on a monthly basis, around US $25,000. “The ministry of Finance has engaged in conversation with several ministries on how we can structurally reduce the cost of doing business, which is beginning to materialise and should be reflected in future budgets,” Irion said.

  The increase in subsidies is due to the subsidies for St. Maarten Stimulus and Relief Plan (SSRP), an additional NAf. 10 million has been included in comparison to last year for St. Maarten Medical Center (SMMC) and besides that it was also budgeted NAf. 40.5 million related to a subsidy for fixed cost. In addition to the increases in the subsidies related to the SSRP, there has been a decrease in the subsidies in the Ministry of Education, he noted.

Source: The Daily Herald


  1. Only 241 millions deficit ? Probably they have forgotten the compensations and smart money that has to be paid to incompetent managers who got sacked. Also, it is custom on the island that any post-calculation of government orders is much higher than agreed. And that is also not included the 10% fraud that is custom in the past years.
    So a new calculation would bring the deficit to something like 480 millions. Just wait one year and see!

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