Cft demands deficit compensation in 2015-budget: “Financial supervision expected until 2018”

POSTED: 01/7/15 3:37 PM

St. Maarten – Financial supervisor Cft maintains that St. Maarten will close the 2014 budget with an 11 million guilders deficit and not – as the government wants the Cft to believe – with an 11 million surplus. The Cft is furthermore concerned about the personnel costs that are 14.5 million guilders above budget over the first three quarters of the year and likely 19.6 million guilders above budget by year’s end. This indicates “insufficient budget-control,” the Cft points out.

The Cft writes this in a letter to Finance Minister Martin Hassink dated December 17. Hassink expects to turn the 11 million-deficit into an 11-million surplus for 2014 by including 19-million in revenue from government-owned companies and 3 million guilders from other sources.

“The Cft questions these projections because there still is no dividend policy and because no dividend decisions have been taken,” Cft-chairman Age Bakker writes to Hassink “Therefore, without additional measures there is a deficit looming of 11 million. The Cft appreciates receiving the agreements with the government-owned entities before the end of the year.”

At this moment, it is unknown whether Hassink provided these agreements to the Cft, or if such agreements actually exist.

The additional revenue has to come from the airport and the port (5 million each), Gebe (8 million), TelEm (3.5 million) and the Central Bank (2 million). “Because St. Maarten already has problems collecting the concession fees from the port, the Bureau Telecommunication and Post as well as the surpluses of the water company, the Cft would appreciate receiving additional, structural substantiation like recent annual accounts, a (concept) dividend policy and or dividend decisions,” the Cft wrote to Hassink.

The Cft spoke on December 4 with Deputy Prime Minister Dennis Richardson. “During this meeting the Cft agreed with the deputy prime minister that St. Maarten makes definitive agreements about these issues with the government-owned companies before the end of the year to avoid this deficit,” Bakker wrote in his letter.

That is not the end of the Cft’s concerns about the 2014 budget. The financial supervisor also noted “a worrisome excess in personnel expenditures of more than 10 percent relative to the budget. “This way the objective of the budget threatens to be undermined. “The Cft appreciates receiving the background of this excess and urges the government to take management measures to make future excesses impossible.”

Other hot potatoes are the payment arrears to social insurance bureau SZV and to pension fund APS. During the meeting on December 4, St. Maarten indicated that it still has no solution for these problems. The Cft wants to know before the end of this month – the deadline for having an approved 2015 budget – how the government has solved these issues.

The execution report over the third quarter that the Cft received on November 17 does not make clear how the country has spent its loans. The only exception is that the government bought of the financial lease for the new government administration building from developer RGM. The Cft requested an overview of spending on loans before the end of last year, and wanted to know how much the country spent on which investments and which liabilities it has assumed.

The Cft furthermore noted that there still is no structural solution for the country’s feeble liquidity-position. In this context, the financial supervisor urges Minister Hassink again to present a solution for the payment arrears with the SZV and the APS.

According to Bakker’s letter, de country is also making insufficient progress with the improvement of its financial management. The Cft asks for a more elaborate explanation of the measures the government has in mind to change this situation.

In diplomatic terms, the Cft rejects St. Maarten’s plans to use its (projected) additional revenue stream for 2014 and the (projected) resulting surplus to compensate the deficits that are on the books for the period 2010-2014 and to compensate the rest over the next three years “because it is expected that financial supervision will remain place at least until 2018.”

The financial supervisor disagrees with this approach. Bakker stated firmly in his letter that the Cft does not want to get ahead of the evaluation of financial supervision that is on the books for 2015 and that it sticks to its opinion that the accumulated deficits must be compensated in the 2015 budget. “The Cft will “get back to this in its assessment of the 2015-budget,” Bakker warned.


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