The Kingdom Council of Ministers is awaiting a “specific advice” from the Committee for Financial Supervision CFT on St. Maarten’s 2018 budget (see related story). It regards the legal provision prohibiting the country from having a deficit.
In the newspaper of March 1 Finance Mister Mike Ferrier had already conceded that the draft budget was “kind of stuck,” as making it balanced in the present socioeconomic conditions simply is not possible and permission to deviate from this requirement was therefore requested.
The projected deficit is NAf. 254.7 million, considerably higher than that of 2017, when the devastating impact of Hurricanes Irma and Maria was felt for just three months instead of the whole year as will now be the case.
A story in the paper of March 3 confirmed that CFT could not issue a positive advice because of the balanced budget rule. However, it also said, “One should take into account that the financial and economic situation in St. Maarten has brought many insecurities after the hurricanes.”
The latter is evident from Government estimating revenues to drop by NAf. 217.7 million plus NAf. 61 million in extra cost related to the recovery effort. That leaves a gaping hole in the country’s financial household, with an income of only NAf. 266.8 million to cover expenses totalling almost double that, namely NAf. 521.7 million.
CFT believed insufficient information was provided to substantiate these figures and missed measures to limit the deficit, such as the further pension age increase from 62 to 65 that has remained pending. At the same time, the challenge to prepare an accurate budget under the current circumstances was acknowledged and even CFT does not consider submitting a balanced one feasible at this point.
The latter must be obvious to anyone who has been on the island in the past six months, with its tourism economy severely affected. A pragmatic solution must therefore be found,
At the end of December Parliament unanimously approved amendments to the 2017 budget to make possible receiving NAf. 67 million (30 million euros) in liquidity support from the Netherlands.
In February related agreements were signed for a soft loan of NAf. 50 million, while reallocating unused capital investment funds produced another NAf. 21.7 million to cover the financing shortfall. That amount does not cover last year’s entire deficit of NAf. 153 million, yet it appears the 2017 budget will be allowed to have one.
One can’t reasonably expect this year’s budget to be balanced either and that’s something The Hague too needs to recognise. Such is the stark reality on the ground and there is simply no getting around it.
