On March 17 and 18 the Board of financial supervision Curaçao and Sint Maarten (Cft) visited Sint Maarten. The main topic of discussion during this visit was the 2016 budget, which had seen considerable delays. Cft Chairman Age Bakker: “We are glad the 2016 budget now has been adopted by Parliament. As soon as the Governor approves the budget, Cft will review the final 2016 budget and issue its advice. Sint Maarten is clearly moving in the right direction.”
Cft met with the deputy Governor, the Council of Ministers and the Financial Committee of Parliament. As usual the Board also met separately with the minister of Finance. During these meetings the outcome for 2015 and the 2016 budget was discussed. The Council of Ministers informed Cft on the plans for the Sint Maarten Medical Centre (SMMC) as well. Cft appreciated this presentation and the hard work that has gone into the plans. In a reaction Cft expressed its view that the renewal of the SMMC should not only include “bricks and mortar” but also a reform of the healthcare system, which is one of the topics of the targeted instruction.
On February 10, responding to a formal request of Sint Maarten, Cft issued a negative advice on the draft budget of 2016, as there were too many uncertainties and risks. It was not evident that Sint Maarten would have a balanced budget in 2016 and beyond and deal appropriately with the targeted instruction.
Cft subsequently offered a number of recommendations to improve the budget. Age Bakker: “It is clear that Sint Maarten worked hard to achieve a more realistic budget by adopting a different, more cautious approach to begin with. The projected level of revenues in 2016 is based on the outcome of the previous years with very limited increases in following years. The projected expenditures are based as well on the outcome of previous years but rise even slower. This budgetary policy accommodates compensation of fiscal deficits of previous years. Sint Maarten did its utmost to incorporate these recommendations in the budget in a realistic manner. The 2016 budget also presents a solution for the payment arrears with APS and SZV. Therefore, I would like to compliment the Minister of Finance and his team. When Cft receives the final budget, we will analyze it and expeditiously issue an advice.” Cft shall evaluate the budget against the rules of the Kingdom Law on financial supervision. Additionally, Cft will evaluate the budget against the criteria stated in the targeted instruction.
Instruction
In September 2015 the Kingdom Council of Ministers (Rijksministerraad) issued a targeted instruction to Sint Maarten. The instruction requires the Sint Maarten government to: 1) settle its payment arrears, 2) compensate for the deficits accumulated in 2010-2014, 3) amend the budget to include all costs related to the public pension scheme and the healthcare system, 4) implement the measures related to the retirement age and healthcare system that have already been agreed upon in the Council of Ministers, and 5) reform both the pension scheme and the healthcare system by the end of 2016. As long as criteria 1 to 4 have not been met, Sint Maarten will not be able to issue any new debt to finance capital expenditures.
Outcome 2015 and outlook 2017 budget
The predicted outcome for 2015 was also discussed. Sint Maarten expects that 2015 will close with a small surplus of ANG 1.4 million. Cft welcomes this positive development. When realized, Sint Maarten will end its fiscal year with a balanced budget for the first time since October 10, 2010. The final outcome 2015 will be provided in the annual financial statement.
Although the 2016 budget has finally been adopted, it has been adopted far too late. Age Bakker: “For the sixth consecutive year Sint Maarten’s budget is not approved in time. This definitely has to change and therefore the 2017 budget will have to be approved in time, i.e. prior to December 15, 2016.” If the approved 2016 budget receives a positive advice from Cft, the multi-annual estimates in the 2016 budget can serve as a framework for the 2017 budget, so the latter can be approved in time. Then Sint Maarten will have made a big leap forward towards an improved budgetary process.
For the first time Sint Maarten has a multi annual budget, for 2016 as well as for the two coming years. This multi annual framework provides a solid base for solving the current fiscal issues. When the framework is executed henceforth until the end of 2018, the government of Sint Maarten will be able to focus on stimulating economic growth.
Cft also spoke to representatives of the Sint Maarten business community. The private sector of Sint Maarten is the cornerstone of economic growth, which has been stagnating lately. Issues holding back economic development were discussed, like cumbersome labor market and immigration laws, as well as outdated bureaucratic procedures for obtaining permits. The business climate would get a boost if a one stop policy for public services would be introduced by government.