Finance Minister Michael Ferrier announced a package of 37 austerity measures put together with Prime Minister Leona Rome-Marlin, saying many will affect the civil service. The latter accounts for the bulk of Government’s cost.
No details were given, because formal approval from the Council of Ministers is yet required. The reality is that public sector employees already either have lost several secondary benefits or have seen them reduced over the years and there are claims pending for – among other things – outstanding cost-of-living-adjustment (COLA) payments.
Be that as it may, in times of severe crisis tough choices must be made. Income for the national treasury has apparently dropped to the point where layoffs to reduce personnel expenses might be the only viable alternative, hardly a favourable one under the current social circumstances.
Whatever cuts are applied ought to include cabinet members, who are – after all – public servants too. In addition, Members of Parliament (MPs) would do well to follow suit and share the burden.
The unions involved probably won’t agree, but options such as a general tax increase like in Aruba could be even worse in terms of the economic impact. This is not the moment to make the destination less attractive for investors while much of its dominant stayover-tourism sector is in shambles and needs to be rebuilt.
Of course, it’s possible that the recovery with help of funding made available by the Netherlands via the World Bank is speedier than anticipated so that its positive effects also on public finances are felt sooner. For now, however, Government can only work with existing figures and prognoses at its disposal.
The good news is that St Maarten will be allowed to have a negative budget this year as an exemption to the Kingdom Law Financial Supervision. Nevertheless, whatever remaining deficit will have to be covered down the road.
It’s thus also in the country’s best interest to keep “going into the red” at a manageable level.
