In the past weeks the Board of financial supervision (College financieel toezicht – Cft) had deliberations on Sint Maarten with the Prime Minister, the Council of Ministers and the Minister of Finance. The principal theme discussed, concerned the progress of the 2011 budget.
Changes draft budget 2011 not sufficient
On the 17th of February 2011 the Board of financial supervision received a number of changes that have been approved by the Council of Ministers with recommendations to balance out the draft budget 2011. The Board cannot approve this.
In these proposals Sint Maarten assumes an income calculation which is too high, and that according to the Board is not responsible. The expectations regarding economical growth and the proceeds of a number of measures are being calculated too highly. Besides, Sint Maarten wants to utilize its reserves. The Board does not consider this a responsible action, as long as there is no certainty regarding the actual capital position. Besides, the Board considers that the reserves should be retained in case of unforeseen circumstances. In this matter the information of the financial situation of the government companies and foundations is important.
According to the Board’s judgment an earnings estimate of ANG 416 million should be the point of departure. Compared to the draft budget that has been submitted, there is a deficit of ANG 45 million. The evaluation shows that there cannot be spoken of a balanced budget that meets the criteria in the Kingdom Act on Financial Supervision Curaçao and Sint Maarten.
Joint agreements to reach a balanced budget
Because it is urgently necessary to break this impasse, the Board has reached agreements with Sint Maarten to as soon as possible reach a 2011 budget adopted by the Parliament of Sint Maarten and positively evaluated by the Board. Besides Sint Maarten should be able to prepare and execute the budget of 2012 and for the coming years, according to its own regulations and the Kingdom Act. The Board has proposed a package of measures to Sint Maarten which should lead to such result.
This package consists of three principal elements. A budget of maximum ANG 416 million, which meets the criteria in the Kingdom Act, should be set up and executed. Furthermore, in order to guarantee budget execution within the established budget maximum, a number of jointly agreed instruments in the management regulations will be established according to provisions included in the Kingdom Act.
These instruments are: introduce preceding supervision by the Minister of Finance, duty to report when undertaking financial commitment outside the preceding supervision and access to the bank statements of the bank accounts of Sint Maarten to judge if the execution of the budget is taking place correctly and completely, request annual reports from the government companies and foundations, review extra capacities and fill in critical vacancies and lastly set up a monitoring committee.
In order to provide the above mentioned package of measures with a legal validity, the Cft requested the Kingdom Council of Ministers to enable the Minister of Internal Affairs and Kingdom Relations to work out the management regulations, by means of a special instruction. The legal basis is laid in article 4, paragraph 4 of the Kingdom Act. This article states: "Our Minister can, in agreement with the Kingdom Council of Ministers, which acts in accordance with the governments, establish management regulations and give general and special instructions regarding the implementation of the duties and authorities granted to the Board through this act". The fact that a package of measurements has been agreed upon with Sint Maarten, simplifies the forethoughts which in this context should take place in advance with the government of this island.
Quick start
The Board considers that with all the propositions which Sint Maarten agreed on, as soon as possible, but in any case within 4 weeks, an adopted and approved budget 2011 within a responsible financial framework is feasible. The package of agreed measures should ensure that the execution of the budget really takes place within the established financial framework. It is to everybody’s benefit, first of all of Sint Maarten’s, that there will not be any further delay in the execution of this package of measures.