Reserves are government’s last option for budget solution

POSTED: 04/7/11 11:59 AM

PM: Raising fees, taxes not under discussion

St. Maarten – An agreement with Board of Financial Supervision (Cft) to draw on reserves is one of the government’s last option in the short term to arrive at a positive advice for the 2011 budget. Talks between the government and the Cft are taking place here this week, in hopes of a joint solution by April 15.

“If we cannot agree to one or more items that would increase the income up to the total amount or partially then we will. Critical for these discussions would be coming to an understanding or agreement about the so called reserves and the allocation of these reserves, towards incidental costs that are in the budget,” Prime Minister Sarah Wescot-Williams said on Wednesday.

If the Cft does not give approval for the reserves to be used, certain incidental costs would have to be eliminated. That would effectively lead to a reduction in the budget.

The reserves became the ultimate option available in the short term because another plan to get a 20 million guilder advance on the sale of shares in companies that were once owned by the Netherlands Antilles to Curacao has hit a “technical snag.” The issue is that no numerical value in terms of dollars and cents has been placed on the shares. The arrangement will also need to be approved by the Netherlands, who also has shares in some of the companies on behalf of Bonaire, St. Eustatius and Saba.

“I haven’t heard that the Netherlands formally objected to the proposal as tabled by St. Maarten, back when it was made. The intention at that time was that, that might have taken a long period of time to get parties around the table and explain why St. Maarten took that avenue, and thus St. Maarten began to negotiate with Curacao to come to an understanding about an advance on the possibility, eventuality of St. Maarten wanting to sell its shares in some of the former Antillean government owned companies. There are specific former Central Government owned companies in which St. Maarten has shares, not only because we were part of the Netherlands Antilles, but also because St. Maarten actually owned shares in these companies, however that discussion which would have primarily been between Curacao and St. Maarten have hit a sort of technical snag and we are not out of that yet in terms of getting a payment based on your intention, so that too may be more of a longer term than we had anticipated. We thought we could have done it one, two, three, but that does not seem possible at this time and that’s why our focus has turned to the reserves,” Wescot-Williams said.

The prime minister reiterated Wednesday that while the government wants to comply with the rules of the Kingdom Law on Financial Supervision Curacao and St. Maarten, the government must take the state of the local and international economy into account.

“Discussions on whatever type of measures, whether income generating or expenditure reductions, needs, in our opinion, to take into consideration having those discussions not under the type of pressure, that we normally have as far it pertains to coming to a budget and not having an approved budget according to the deadline, so we really need to be able to finalize this matter of the budget 2011 as soon as possible so we can continue to work on the other matters that government needs to work on for the people of St. Maarten, and then of course right around the corner is the preparation for the 2012 budget,” Wescot-Williams said.

She added, “At this stage in the entire budgetary process we don’t have the time to have a discussion that would have to underpin any matter that will have to do with the increase of fees, to how much, for what services and those kinds of things. It is the opinion of the Council of Ministers of St. Maarten that those types of discussions cannot be rushed. In our discussions with Minister Donner, we also made it clear that with respect to, for example, the increase in the turnover tax (TOT), we did that, again, with a lot of pressure. We would have preferred, which I said from day one, that we did not have to do that under the kind of pressure that we did it. I even added to that, that we did it against better economic judgment in terms of increasing fees and taxes on such a short notice. So we would prefer at this stage not to have to go into discussions, which would be necessary, especially about any increases in taxes.”


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