Perceived Naf.30 million difference
PHILIPSBURG, Sint Maarten – Minister of Finance Hiro Shigemoto met with representatives of the Committee for Financial Supervision CFT two weeks ago in Curacao regarding the 2011 budget.
According to the CFT, they have come up with a budget of Naf.414 million compared to the Naf.444 million that was approved by the Parliament of Sint Maarten back in December.
The perceived difference between the CFT and the Government is a sum of Naf.30 million. The CFT has given the Government of Sint Maarten until February 17 to present an adapted budget that has also been approved by Parliament.
Negotiation with the unions regarding the Cost of Living Adjustment for the years 2006, 2007 and 2009 retroactive to January 1, 2011, will cost an additional Naf.15 million which has to come from somewhere and could drive up the perceived deficit to Naf.45 million, Minister Shigemoto pointed out.
"The Government was only able to budget the two per cent out of the 5.3 per cent in the 2011 budget and none was taken up in the 2010 budget. Therefore the retroactive payment cannot realistically be made until the 2011 budget gets a positive advice from the CFT. Since this is not the case, the Government just cannot commit to this payment until it has had the time to amend the budget which first has to be accepted.
"If cost cutting proves to be a challenge and would start to affect the services rendered to the community, additional measures may need to be taken in order to close the gap," Minister of Finance Hiro Shigemoto explained on Monday.
The CFT came to the conclusion of a budget of Naf.414 million based on the recent Central Bank of Curacao & Sint Maarten forecasted economic growth for 2011 compared to 2010. The Government is of a different opinion and says the first and second quarter figures of 2010 are not complete and cannot be used as an accurate basis to determine the growth for 2011.
The overall consensus according to the minister is that dialogue will continue with respect to making sure the budget complies with the financial supervision rules and regulations that have been established.
This course of action according to the Minister will continue between the CFT and government in order to come to a final advice from the CFT.
"Our deliberations in particular focused on the status of the advice from the CFT regarding the 2011 budget. The advice regarding the budget is not complete as yet and aspects pertaining to the realized income for 2010 were discussed.
"The CFT’s analysis of government’s income over 2010 differs considerably from that of government and they have sent their analysis on to the Secretary General of Finance for further comments. Also noted in the analysis of the CFT’s observations thus far is particularly the reported economic growth for Sint Maarten by the Central Bank of Curacao and Sint Maarten, which they reported was 0,3%.
"The government indexed its realized income 2010 by an average 2,0% for the budget 2011. The government strongly believes that this indexing is closer to the reality than to say that there is practically (0,3%) no or very little economic growth projected for Sint Maarten in 2011," the Honourable Minister of Finance Hiro Shigemoto pointed out on Monday.
The Minister added that there are two options available to the Government of Sint Maarten. Firstly, allow the CFT to come with a negative advice and let the process take its course which leads to the Kingdom Council of Ministers and possibly with the Kingdom Council of Ministers sending directives as how to balance the budget.
The second option is, to delay the advice of the CFT temporarily in order to have a more realistic budget rather than based on perceived analysis of the income generated over 2010.
"The government is busy with an answer to the analysis of the CFT of the 2010 income collected. It will show that the difference in estimated income is not as great a gap as the CFT indicated in its analysis.
"The discussions and exchange of viewpoints is expected to continue until consensus can be arrived at or one party proves their analysis to be more correct.
"What must not be lost in this discussion is that a budget is a forecast and is not based on solid data especially since nobody can see in the future that clearly and concisely. Sint Maarten’s government opted for the second option to continue the analysis of the draft budget through dialogue with the CFT and providing the necessary substantiation for our analysis," the Honourable Minister of Finance Hiro Shigemoto concludes.