Dear Editor,
The Committee of Financial Supervision CFT will be meeting with parliament’s permanent financial committee in a closed door session of the House. The main topic of discussion will be the country’s financial situation.
The establishment of the CFT dates back to the latter four years pre-2010 when we attained country status (2006 – 2009). During that period, the globe saw the crash of the financial markets in mid-2008. This would signal the development of the global recession which is still felt even today, five years later. The financial crash brought forward the worse recession that was comparable to the Great Depression 60-years ago.
Country Sint Maarten during the past three-four years has had to present a deficit free national budget while countries around the world – many – used public funds to make investments in their economy resulting in job creation or maintaining the level of employment in order not to be confronted with a social crisis. Sint Maarten on the other hand has been grappling with presenting balanced budgets. The agreements made in the period 2006-2009 with the Dutch Government, and saw the formation of the CFT which critiques the country’s budget to see if it conforms to the Kingdom Laws for budget discipline needs to be reviewed.
This review is not only a Sint Maarten reality, but a global one as well. Reviews and recommendations have been brought forward by the financial and economic experts in Europe as well as for the rest of the world on what needs to be done to get the global economy moving forward again creating employment and business opportunities for people.
European Union (EU) finance experts have reached a preliminary agreement on changing the way the 28-nation bloc determines some deficit figures which will lessen the pressure for austerity measures in some crisis-hit European economies. Spain has record unemployment of about 26 per cent. The new change in budget policy will allow Spain’s government to invest thereby fostering growth.
The EU’s change in budget policy according to financial experts will go a long way in easing the economic problems. The closing or narrowing of budget deficits in the 28-bloc of countries in the midst of a recession and record European unemployment was seen as counter-productive and has been seen as an acknowledgement that the deficit-cutting programs of the past three years have failed to address growth.
A 2013 report by the United Nations (UN) Conference on Trade and Development (UNCTAD), says that governments must address the fundamental causes of the global economic crisis, in particular rising income inequality, the diminishing role of the State (Government), and the predominant role of the poorly regulated financial sector.
The Trade and Development Report 2013 notes that developed countries have so far addressed the crisis by implementing stimulus measures that rely on expansionary monetary policies, but these have been unsuccessful in fostering growth, as they have been combined with fiscal austerity and subdued private demands.
In contrast, developing countries have been able to mitigate the adverse impact of the crisis in the developed world by implementing countercyclical policies, which stimulate the economy when it is facing a downturn. However, the effects of these policies are fading away and the economic environment shows few signs of improving, making it increasingly difficult to avoid slowdowns.
The report contends that developing and transition economies that heavily depend on exports must reconsider their development strategies and rely more on domestic and regional demand. Country Sint Maarten in my opinion falls within this category. We export sand, sun and sea, and we need to diversify our product to also include medical tourism and sports tourism besides cruise and stay-over tourism. With respect to stay-over tourists, we need to focus on the Latin American market as well as China/Asian markets.
The report also says that developed countries are not addressing the root causes of the financial crises, and this, compounded with mishandling the crisis itself, has contributed to the current disarray of the – global economy. This statement alone is a strong argument why the role of the CFT and the Kingdom Laws that gives it the authority needs to be reviewed and adapted to the current economic realities of the world, of which Country Sint Maarten is also a micro part thereof.
The UNCTAD says that since 2008, the world output growth has slowed down and does not show signs of recovering. It fell from 4.1 per cent in 2010 to 2.8 per cent in 2011 and then to 2.2 per cent in 2012. The report predicts that it will further decelerate to 2.1 per cent this year-2013. These are most definitely wake-up calls for all nations including country Sint Maarten to start thinking and doing rather than only looking and procrastinating. Hon. Prime Minster Sarah Wescot-Williams a few months ago called for the establishing of an Economic Task Force and the Minister of Finance Hon. Martin Hassink a few weeks ago mentioned the same for a Financial Task Force. These are indeed necessary and should be put in place as soon as possible.
The report looks at three economic areas and says that the increased tendency towards fiscal austerity in the EU makes it highly unlikely to return to a higher growth trajectory. In the US, private domestic demand has begun to recover but cuts in public spending are having a "contractionary" effect. In contrast, the Japanese Government is providing both strong fiscal stimulus and monetary expansion aimed at reviving economic growth and curbing deflationary trends.
Members of Parliament of the honourable House should put pertinent questions to the CFT on Wednesday with respect to whether current economic realities do not dictate a change in the way the committee reviews the budgetary information and whether a budgetary deficit should be allowed for a certain period of years.
Roddy Heyliger