Council of Ministers approves 2011 national budget; Budget sent back to CFT for review

PHILIPSBURG, Sint Maarten – Honourable Minister of Finance Hiro Shigemoto announced on Thursday that the 2011 national budget has been approved in a special session of the Council of Ministers on Thursday. The budget has been sent to the Committee for Financial Supervision CFT and an advice from the latter is expected within the next two weeks. 

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Due to the serious nature of the current Government financial situation, the Minister of Finance has decided to continue to monitor that the expenses are made according to the financial rules and regulations as stipulated by law.

This entails that all budget expenses will continue to undergo the established financial controls by the Ministry of Finance, with the exception of the budgets for Parliament, the High Councils, the Prosecutor’s Office, the Court system, and the Cabinet of the Minister Plenipotentiary in The Hague.

Two technocrats from the CFT Secretariat worked along with technocrats from the Finance Department to review the changes that needed to be made to the national budget.

The changes took into consideration the points mentioned in the letter received from the CFT in January, which estimated the deficit on the budget to be Naf.30 million. An additional Naf.15 million was added to this deficit due to the agreement signed with the two unions WICSU and ABVO to grant civil servants, teachers and staff of the subsidized school boards the 3,3 per cent cost of living adjustment in July 2011 retroactive to January 1, 2011.

Besides this, an additional Naf.16 million in costs were also added as adjustments which would have been corrected by means of a budget amendment later this year. However, according to the Hon. Minister of Finance, it was decided to include them now. These additional costs include areas such as an increase in subsidy for the drug rehabilitation center Turning Point, an increase in the budget for the Constitutional Court, the Plan of Approach for the Justice Ministry, and the Joint Court of Justice.

The proposed solutions to cover the total deficit which includes the additional cost totals Naf.61 million. Cost cutting measures will be taken across the seven ministries which were discussed and jointly decided upon with the respective Secretary Generals totalling Naf.14,4 million.

In this budget there is a total of Naf.32 million in incidental costs. The proposal is to cover these incidental costs from government’s cash reserves considering that they are onetime expenses which will not come back in 2012 and subsequent years. The government also plans on reducing income as was suggested by the CFT.

"Government will furthermore decrease its growth factor from 2 per cent to 1,3 per cent since we do not agree with the projected economic growth of 0,3 per cent. We feel that this percentage does not take into consideration government’s contribution as a result of taking over the tasks formerly executed by the former Antillean Federal Government as well as government’s decision to pay the additional 3.3 per cent in cost of living adjustment to all civil servants, teachers and subsidized school boards teaching staff.

"Also, additional income in the amount of Naf.5 million in dividends was incorporated and a total of Naf.3.8 million in revenue was included for the second half of 2011 under new policies. This will come from an increase in fees for work permits and the introduction of a non-refundable fee for residence permits," Honourable Minister of Finance Hiro Shigemoto explained on Thursday.

The intention is to have the CFT give its advice on the 2011 national budget adjustments before going to the Council of Advice and then Parliament. This approach is taken in order to save time and ensure that Government does not have to go through another round of debate in Parliament to later discover that the CFT does not agree with the presented national budget.

The Consensus Kingdom Law on Financial Supervision Curacao and St. Maarten stipulates that the budget has to be established, but it does not stipulate by which entity, hence, it can also be done by the Council of Ministers.

The Minister of Finance will also be writing a letter to the CFT on Friday as it pertains to the status of appointment of Sint Maarten’s representative to the CFT Board. "The longer this takes places us at a disadvantageous position without a representative on the board," Hon. Minister Shigemoto pointed out on Thursday.