Board of Financial Supervion (Cft) warns Minister Hassink

POSTED: 07/8/14 3:08 AM

Insufficient information: no budget-approval

St. Maarten – The Board for financial supervision (Cft) has warned Finance Minister Martin Hassink that the draft budget 2015 has to meet specific requirements. “If the Cft does not have sufficient information whether the budget meets the standards of the Kingdom law financial supervision, the Cft cannot give a positive advice about the 2015 budget. This also means that in that case the Cft cannot approve intended loans,” Cft-chairman prof. dr. Age Bakker writes in a letter to Hassink.

The first source of concern for the financial supervisor is the country’s liquidity position. The Kingdom Council of Ministers requested in May that St. Maarten writes a plan of approach for the improvement of its liquidity position within the next six months, including a planning.

In the first execution report 2014, St. Maarten included its intentions to improve its liquidity position. “To arrive at a real and structural improvement the indicated intentions must be drawn up and executed immediately,” the Cft writes, adding that it will specifically scrutinize the 2015 budget for these structural improvements and the way these improvements are substantiated and elaborated on.

The financial supervisor furthermore wants more clarity about payment arrears. There is a huge discrepancy between the payment arrears to social insurance agency SZV St. Maarten mentions in its first execution report (16 million guilders) and the amount reported by SZV (113 million guilders). The Cft will explicitly take into account whether these arrears have been settled when it comes to assessing the 2015 budget.

The Cft furthermore will look at how realistic revenue-increasing proposals in the new budget are. The feasibility of capital investments is also a point of attention.

In the first execution-report of this year, St. Maarten has indicated that government-owned companies could contribute structurally 5 to 10 million guilders to the budget. “During the past couple of years the Cft has regularly spoken about the relatively healthy government-owned companies and the way they could contribute to the budget,” the letter states.

The Cft acknowledges that the companies could contribute to the budget, but it wants to know more: “For a solid review, the draft-budget must include a substantiation of these additional revenues per government-owned company.” The Cft also wants to see the most recent annual accounts of the companies and the (draft) dividend policy that forms the basis for the additional revenues.

Lastly, the Cft returns to a major headache: the country’s financial management. Reports from the government accounting bureau Soab and the General Audit Chamber over 2010, 2011 and 2012 show that the financial management is not up to standards. The Pefa-assessments confirm the findings of both entities. (Pefa stands for Public Expenditure and Financial Accountability).

“Good financial management is necessary to arrive at a complete, orderly and verifiable budget. The Cft is aware that good financial management cannot be realized from one day to the next, but during the process where St. Maarten wants to go (as established in the improvement plan) there is for the time being little progress.”

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