Minister Hassink paints bleak picture for 2014 and 2015: “Without immediate measures significant deficits in budget”

POSTED: 12/10/14 6:40 PM

St. Maarten – “If no immediate measures are taken, 2014 and 2015 will end with significant deficits,” Finance Minister Martin Hassink told members of the Central Committee of Parliament yesterday afternoon. The Board financial supervision (Cft) projects a 10 million guilders deficit for 2014. It has urged the government to reduce its 2015 budget from 445 to 426 million guilders.

Nevertheless, Hassink presented data that suggest the cabinet will stick to its guns and come up with a 445 million guilders budget. The Council of Ministers has approved this budget and it is currently at the Council of Advice for consideration.

Yesterday’s Central Committee meeting was about the quarterly reports over the first three quarters of 2014, but Hassink announced that he would also go into the forecast and the numbers for 2015.

The first two quarters of the year looked “reasonable” he said and there was an expectation that annual revenue for the year would meet the budget. Between July and November income always drops due to seasonal patterns, but this year was different: “The present development for the same period is worrisome,” Hassink said. “The tax administration is analyzing the drop in wage taxes in August.”

The budget 2015 seems to be already in trouble, not only because of the negative advice from the Cft on the draft, but also because the 2014 revenue stays behind. “To justify an income level of 445 million, we must at least realize 435 million guilders in 2014,” Hassink said, adding that this is not likely to happen: “I expect revenue to be between 425 and 430 million.”

To address this situation, Hassink suggests two alternatives: adjusting the 2015 projections downwards (meaning budget cuts) or implementing quick fixes (meaning tariff increases).

Hassink said that the 445 million 2015 draft budget is a “skeleton budget” and that cutting any further into the expenditures “is hardly possible.”

“We should focus on generating more income,” he said later in his presentation. “We have to work towards annual revenue of 500 million guilders by 2018. We cannot afford to remain in a situation whereby our budgets are rejected and we are unable to do what we have to do.”

The minister explained that the combined ministries already cut back their expenditures from 470 to 445 million for 2015. The budget has to drop another 19 million before it satisfies the supervisors at the Cft.

For the long term, Hassink indicated plans to increase annual revenue from 425 to 500 million over a period of four years. Part of this projection are expected economic growth (15 million), increased tax-compliance (10 million), changes in tax legislation (22 million), changes in tariffs at the Ministry of Tourism, Economic Affairs, Transport and Telecommunication (7.5 million), income increasing measures and dividends (13.5 million), and reorganization tax office (7 million).

Minister Hassink furthermore said that he is working on alternative plans to compensate budget deficits of previous years but he did not go into the details of these plans. The Cft demands that these deficits are absorbed in the 2015 budget.

Personnel expenditures remain a source of concern. Hassink said that they are becoming “unaffordable high.” If the pension funds APS increases its premium it could add another 4 million guilders to the country’s already bloated payroll.

MPs came up with several questions that will be answered during a continuation of the meeting on Friday, starting at 10 a.m.

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Minister Hassink paints bleak picture for 2014 and 2015: “Without immediate measures significant deficits in budget” by

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