CFT advises govt to get independent study on minimal costs for existing policies and laws

PHILIPSBURG – The Committee for Financial Supervision CFT has advised government to immediately have an independent external accountancy firm carried out a study to determine the minimal level of the costs would come from the existing policies and laws. CFT has given a maximum time frame of six weeks for the study to be conducted.  

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Finance Minister Hiro Shigemoto said the United People’s (UP) party/Democratic Party (DP) Government takes this advice issued by CFT on Thursday, October 21, on the 2011 draft budget very seriously. The preliminary groundwork for the audit has started internally and the external accountancy firm has to be selected. That selection will be done early next week.

The 2011 draft budget did not get the approval of CFT, as government had already anticipated, due to the incompleteness of the fiscal document.

That budget, left behind by the former National Alliance (NA)-led government, was already labeled as incomplete by CFT. It was still submitted to the financial advisory body by transitional Commissioner Roy Marlin (DP) on October 7. This was done because the former government had already missed several deadlines in the budgetary process and St. Maarten was again at risk of being reported to the Kingdom Council of Ministers as non compliant with the General Kingdom Measure on Temporary Financial Supervision.

The draft budget should have been submitted by October 1.

The advice issued by CFT this week was based on the budget submitted by Marlin on October 7, two days after taking office.

The CFT had told Marlin that the draft budget would not obtain a positive advice because there was too much insecurity with the figures. Becoming a Country and taking over the responsibilities of such are totally new experiences for St. Maarten. The financial consequences of these changes are still popping up coupled with lack of manpower and expertise in every ministry. That could have possibly resulted in the draft budget being overly inflated with costs. The income side was, in the CFT’s opinion, not representative of the realized income in 2010.

Now, the continuation of the budget process now falls to Shigemoto to handling in his new capacity as Finance Minister as of October 10.

This audit of the budget prescribed by CFT should deal with, but not limited to, the budgets of the Ministries of Education and Health, allocations for Social Security, Justice, Infrastructure and general personnel.

In conjunction with the audit, CFT has advised government has to come with a policy plan for the 2010-2014 governing period which would need to be translated into budget figures. The UP/DP Governing Programme that is being worked on will serve as the basis for the policy plan. An analysis of the core tasks of government will be extracted from the results of this analysis.

Shigemoto said CFT wants attention to be paid to the income side of the budget. The focus needs to be placed on the income that the current fiscal system can generate, if this system is being applied and executed properly. There is also the necessity to review the fiscal system and determine if it requires any immediate action to be more competitive with the BES islands’ new fiscal system. This analysis is being executed by the Department of Fiscal Affairs and the result may very well call for moderate changes to our fiscal system.

CFT also mentioned the needed for improvement to the current financial management.

Minister Shigemoto said Government is short of sufficient qualified manpower, causing the project to improvement financial management to not progressing as it should. The struggle to recruit and maintain qualified personnel is an ongoing one which requires thinking outside the box to get the required staff and to equally keep them employed by government. This project has taken on the status of TOP PRIORITY within the Finance Department. All measures are being taken to get the required staff in service.

Prior to the CFT advice, Minister Shigemoto met with CFT Secretary General Mr. G. Bergsma and Mr. R. Panneflek on Friday, October 19 to discuss the problem of the CFT perceived deficit on the draft budget 2011 of roughly NAf 130 million. Bergsma again informed the minister that a negative advice on the draft budget was pending. The minister also met with the members of the CFT Secretariat on Tuesday, October 19 for technical discussions on the same draft budget.

The minister said one thing is certain, and that is that this threatening budget deficit for 2011 cannot be solved by incident or ad-hoc measures, but with integrated and multi-disciplined and structural approaches within government and consideration for temporary flexibility for a defined period on some of the requirements in the General Kingdom measure. St. Maarten has to also show its willingness and preparedness to correct the situation by taking serious and implementable measures. It is essential for the successful balancing of the draft budget 2011.

Factors which influenced the current financial/budgetary situation of government resulted from inheriting neglected (Central) departments with many employee issues that comes with financial consequences, last minute decisions taken by the Central Government that St. Maarten has inherited the financial consequences, less income generated in 2009 and even less in 2010 as a result of the sluggish economy, and further deterioration of the infrastructure (roads and otherwise) due to bad weather experienced which brings with it increased costs.

A draft amendment is also pending and needed for the 2010 budget which has a deficit of some NAf 9 million. This deficit needs to be resolved before the amendment can be handled in the Parliament. The draft budget amendment would also have to be sentcofficiallyc to the CFT for advice. The Finance Department and Accounting Firm Hassink and Roos are preparing proposals on how to balance the 2010 budget. These proposals will be presented to Shigemoto for review and once accepted will be put to the Council of Ministers for approval.

As agreed upon between the former Executive Council and now former Dutch State Secretary for Kingdom Relations Ank Bijleveld in August, two members of the CFT Secretariat were on St. Maarten two days per week to sit with civil servants during the budget compilation to get a better understanding of the way the budget is compiled and to aid in the faster evaluation of the draft now and in the future.