Cft regrets “lack of constructive cooperation” reproach

POSTED: 11/24/15 6:16 PM

Age Bakker: “Appeal does not suspend instruction”

St. Maarten – Financial supervisor Cft “regrets” that “in the vision of St. Maarten there is a lack of constructive cooperation by the Cft.” Chairman Prof. Dr. Age Bakker writes this in a letter to (now former) Minister of Finance Martin Hassink, dated October 26.

The letter is a reaction to a letter St. Maarten sent to the Cft about the draft 2015 budget amendment and about the instruction the Kingdom Council of Ministers issued.

“The Cft strives to be able to act as a trusted advisor towards the countries,” Bakker wrote.

The Cft-chairman refers to his visit to St. Maarten in September when he spoke elaborately with Minister Hassink, the Council of Ministers and the parliament. At that time, Bakker, wrote, “St. Maarten saw sufficient possibilities to comply with the requirements of the instruction, be it not within the terms on all parts.”

Currently, Finance Minister Richard Gibson is in the Netherlands to discuss the instruction. On Thursday there is a hearing at the Council of State about St. Maarten’s request to suspend the instruction and to make it possible to contract loans for capital investments. Gibson’s predecessor Hassink filed an appeal at the Crown against the instruction.

In September, expectations were that the country would be able to settle the payment arrears with social insurance agency SZV and pension fund APS by the end of the year, in the sense that there would be a solution for 100 million guilders, while the rest would be paid off in the next three years.

A decision was nearby in September, the Cft writes in its letter. The government thought at the time that legislation and decisions related to the first three points of the instruction would be in place before the end of the year.

Since St. Maarten would (and now has) miss(ed) the instruction’s deadline of November 1, it was up to the country to inform the Kingdom Council of Ministers and to indicate at what time it would be able to comply with the instruction.

The Cft maintains that St. Maarten has to comply with three of the four issues outlined in the instruction before it is prepared to lift the ban on loans for capital investments.

The first one is that the accumulated deficits for the period 2010-2014 must be compensated in the 2015 budget. The second one is that the expenditures for healthcare and pensions have to be included completely in the 2015 budget and in the multi-annual budget. The government also has to increase the retirement age for the AOV (the parliament has approved this) and it has to execute reforms in the healthcare s system.

Then there is the matter of payment arrears to SZV, APS and other creditors. The last requirement is taking measures before the end of 2016 to maintain the viability of the pension and healthcare system.

That the government has appealed the instruction at the Crown “does not suspend the instruction,” Cft-chairman Bakker writes, adding that the first three points of the instruction must be into effect by November 1 – a deadline the country has already missed.

The Cft also maintains its objections against St. Maarten’s intentions to spend more money this year than the 445-million guilder ceiling in the budget allows. These expenditures have to do with healthcare, justice and the tax inspectorate.

The Cft acknowledges that these investments, as St. Maarten claims, are in the interest of the population, but it notes that they must be financed “structurally and realistically.” Solving the problems mentioned in the instruction are also of great importance to the population, the Cft notes.

Bakker writes that the Cft and St. Maarten have no differences of opinion on most issues. The only thing is that the Cft is much more careful with the projection of additional revenue and the space this creates for additional expenditures.

The financial supervisor repeats that the projected increase in revenue of 30 percent for the period 2015-2018 “is not attainable in practical terms.”

Bakker suggests to involve the Cft in an early stage in the 2016 budget “to prevent that it considers significant changes necessary in a late stadium.”

Lastly, the Cft points to a policy rule St. Maarten has imposed on itself in the first budget amendment for 2015: expenditures are only possible once additional revenue has been realized.

“The Cft completely supports this policy rule. It means that the projected increase in expenditures can only be added to the budget in later years, for instance through an amendment during a year when the needed revenue indeed has been realized.”

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