PHILIPSBURG--The Committee for Financial Supervision CFT has called on St. Maarten to take concrete measures to actually realise the budget surpluses foreseen in the Financial Recovery Plan for 2021 due to increasing income.
By restoring the economy, reducing cost and restructuring the Tax Department, St. Maarten expects structural surpluses from 2021 onwards.
Given the inadequate state of the financial management, CFT has reached an agreement with government to work towards an unqualified auditor's report for the 2021 financial statements.
CFT Chairman Raymond Gradus said in a press conference in St. Maarten on Thursday: “Cost-saving measures and the improvement of tax compliance are crucial in achieving a balanced budget. In addition, sound financial management forms the basis for timely and reliable figures.”
The recovery plan “has good elements in it,” Gradus said. “We have called upon the Council of Ministers and Parliament to put concrete measures in place for those issues.”
An example is the approval of the pension legislation, which has meanwhile been submitted to Parliament to be processed.
For the first coming years, St. Maarten expects budget deficits. The expected deficit for 2018 has been adjusted to NAf. 144 million. The 2019 draft budget shows a deficit of NAf. 88 million. St. Maarten, therefore, “still remains dependent on loans for liquidity support, which will lead to a rise of the debt ratio.”
CFT has therefore advised government to be cautious about committing to other loans. “St. Maarten should make use of the appropriate trust fund for the financing of the reconstruction projects,” said Gradus.
High on the agenda was the follow-up on the topics mentioned in the instruction given by the Kingdom Council of Ministers in 2015. As a result, St. Maarten must compensate the deficits of the period covering 2010 to 2014, solve payment arrears and take measures to ensure the old age provision and the healthcare system are kept structurally affordable. The deadlines for these issues have expired or will expire by the end of this year.
In various conversations. CFT has been informed about the progress. Partly due to the consequences of Hurricane Irma, St. Maarten is unable to meet all items mentioned in the instruction by the end of this year.
St. Maarten will report on the progress and request from the Kingdom Council of Ministers new deadlines for the issues in the instruction that will not have been resolved by the end of this year. The CFT has requested attention for measures that will help reduce the shortages in the health care system.
Again, attention was drawn to the poor state of the financial management. Without proper financial management, an orderly budget process is not possible. The (ultimate) touchstone is the timely adoption of financial statements with an unqualified auditors' report.
It has been agreed that the government of St. Maarten guarantees this with regard to the 2021 financial statements, and with appreciation the CFT has taken notice of this commitment. It has also been assured that the 2016 and 2017 financial statements will be submitted this year. The adoption of the financial statements for 2013, 2014 and 2015 is expected to take place in the coming weeks.
During its visit to St. Maarten, CFT met with Governor Eugene Holiday, the Council of Ministers collectively, the Minister of Finance, the Minister of Health, Social Affairs and Labour, the Financial Committee of Parliament, World Bank representatives, Princess Juliana International Airport and the General Pension Fund.
This was the first visit of new CFT members Henk Kamp (the Netherlands) and Russell Voges (St. Maarten). The other two members of the committee are Gregory Damoen (Curaçao) and Gradus.
