Publication semi-annual report January-June 2014 Cft Curaçao and Sint Maarten

Cft: ‘Keep on working on multi-annually balanced budget and improvement of financial management’

Willemstad – The execution of the 2014 budget is running its course on both Curaçao and Sint Maarten. If the countries continue on this path, their budgets will stay balanced this year. Additionally, since the beginning of 2014 Curaçao meets all the requirements of the instructions of 2012. In its semi-annual report the Board financial supervision for Curaçao and Sint Maarten (College financieel toezicht Curaçao and Sint Maarten – Cft) still urges both countries to vigorously deal with the risks for the long term budget and improvement of the financial management.

Based on the positive advice on the 2014 budget, in the first half of 2014 both Curaçao and Sint Maarten have taken out loans from the Netherlands through the current tender. Curaçao used these funds to finance the construction of the new hospital, Sint Maarten partly for various investments, and partly to perk up the precarious liquidity position. In its evaluation of the concrete loan requests, besides the test of the interest burden standard (rentelastnorm), Cft also took into consideration the capacity of the countries to absorb the loans. This has led to Cft agreeing to a lower loan amount than originally requested by Sint Maarten.

It is important for Curaçao to maintain the positive image of budgetary control it built up in the past period. To this end, the government needs to actually implement the previously intended government policy to reduce its operating cost and subsidies. The Board has also conveyed this message during its visit to Curaçao in May. Additionally, looming deficits in the short term basic insurance should be dealt with and the financial position of public companies should be addressed. The ‘turn around’ plans of the government companies that are facing financial problems should be implemented in order to minimize their risks for the budget.

A capital injection improved the liquidity position of Sint Maarten significantly the last half year. However it really remains a point of concern for Sint Maarten to strengthen its liquidity position in a structural way, and to build up sufficient resistance capital. The challenges for Sint Maarten are currently mainly in the area of payment arrears. Sint Maarten has not been able to reduce these debits so far, although this subject has already been discussed with the two largest creditors, namely the pension funds and health insurance.

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Long term risks
For both countries the Cft will test the identified risks for long term balanced budgets on the 2015 draft budgets. This evaluation shall take place during the second half of 2014. The Cft will also include the condition of the financial management and its consequences for the budget in its assessment. There is much room for improvement in this area, even though much effort is being made by these two countries to show progress.