Cft in its half-year report on Curaçao and Sint Maarten: Cft:

Cft: “Challenges in financial management and economy”

Willemstad – The Board of Financial supervision (College financieel toezicht – Cft) observes in its sixth half-year report that in the coming years Curaçao and Sint Maarten face various challenges to maintain their public finances in due order and to improve their financial management, that in addition to the trials the countries’ economies will endure from the international conjuncture.

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Curaçao will have to demonstrate that its ambitious reform plans will actually be implemented, whilst Sint Maarten has to accomplish a lot with the listing of all effects the aging of the population has on the long run on the public finance. Furthermore, both countries, but particularly Sint Maarten, will have to achieve a great deal in order to improve the financial management. This is very important, considering that sound financial management is a crucial condition for diligent budget management.
Cft acknowledges that both countries have made progress. Curaçao has ambitious plans to reform the public health sector and the old age pension, in order to improve the long term sustainability of the budget. The cooperation and communication with Sint Maarten has improved considerably in the recent period. The Cft office that was opened on January 17th, 2012 in Philipsburg will have to fortify this upward development.
In 2012 the Board shall monitor the ambition time planning of the reform measures closely, together with Curaçao and, in the event the planning is not kept, the Board shall also see to it that adequate securing measures be taken. In its half-year report Cft also perceives risks regarding the planned construction of a new hospital. Currently the new hospital has not yet been provided for in the budget, reason why there is no clarity about the financials framework and the possible risks of a new hospital for the government budget. Clear is though that the new hospital can only be exploited in a financially sound way if the many reform measures are actually implemented. Cft shall therefore always consider these reform plans and the construction of the new hospital connected with each other.
With regard to Sint Maarten Cft has expressed its concern about the soundness of the income estimate in the 2012 budget. An important revenue increasing measure for 2012 is the taxing of non-residents with real estate on Sint Maarten for rent income. Cft welcomes this type of initiative to increase income, but it also foresees risks with regard to the practicability of such measure. In 2012 the Board shall utilize a concrete time planning drawn up by Sint Maarten to monitor this measure. If during the year it appears that the projected revenue will not be realized, Cft will see to it that adequate measures will be securing be taken to maintain the budget in balance.
Another point brought to attention in the half-year report is the financial position of the government companies and foundations on Curaçao and Sint Maarten. For both countries Cft has received the financial statements over 2008 and 2009 (though just partly). Based on this – incomplete – information Cft draws the conclusion that the financial situation of some of the larger government companies and foundations on Curaçao is critical. On Sint Maarten the situation up to and including 2009 seems less alarming. Since the countries are considered implicitly as the guarantors of the government companies and foundations, it is important to diligently bring clarity into the financial situation of these entities. That is why in 2012, together with both countries, Cft
will make an inventory of the current financial statements of the government companies and foundations, based on the most recent financial statements. This way there will be a better view on the budgetary risks for the countries, so policies can be developed to control the risks and take necessary measures.