Serious measures ahead to generate more revenue

POSTED: 10/26/15 12:40 PM

Draft 2016 budget stands at 485 million guilders

St. Maarten – “We have tremendous challenges and we need to take serious measures to increase income and to cut costs,” Finance Minister Martin Hassink said earlier this week.

How tremendous those challenges are appears from the cold figures. The budgets the seven ministers of the Gumbs cabinet submitted for 2016 totaled 510 million guilders. That number has been brought down to 85 million, and that is the budget the Council of Ministers approved this week,

Minister Hassink pointed out that the expected income for 2015 is 440 million guilders and that begs the question how the country will bring revenue to the 485 million level next year.

Personnel costs exceed 200 million guilders next year. “That is 10 percent of gross domestic product,” Hassink said, “so that is quite high.”

Hassink did not provide any details about pending income-generating measures, because the budget is now for review at the Council of Advice and the financial supervisor Cft. “We expect to hear that we are too optimistic about our income,” he anticipated a reaction from the Cft. “This means that we have to cut more costs. While we are awaiting the reaction from the Cft we are already diligently working on how to deal with that.”

State revenue in St. Maarten hovers around 18 percent of gross domestic product (GDP). That is below the Caribbean average of 21 percent. “The potential of the island is much higher than what the government is currently collecting,” Hassink observed.

Adding to the financial problems are the accumulated debts. The year 2014 closed with a deficit of 16 million, bringing the accumulated debt since 10-10-10 to over 60 million guilders. “Based on the instruction from the Kingdom, we have to compensate those deficits in the coming years,” Hassink said. “We have to add that to our cost levels and this means that it becomes even more difficult to balance the budget.”

On Tuesday, Hassink spoke with Cft-chairman Age Bakker who informed about the state of financial affairs. “We are working on the instruction and on the problems that led to the instruction, Hassink said. “We have no problem with the content of the instruction. Our problem is with the timing. We have to do too many things in too short a period of time. I am however optimistic that we will reach at least some of the objectives.”

The amendment to the 2015 budget that has to be handled in parliament before the end of this month, came back from the Council of Advice, Hassink said. “We are making an additional report and then it can go to parliament.”

The payment arrears to pension fund APS, social insurance agency SZV and some other creditors is another situation screaming for a solution. That is not going to happen within one year, Hassink said. “We’re diligently working to solve those problems but because of the amount involved (189 million guilders – ed.) we cannot do it within one year. We have to take more time for that.”

Legislation to increase the retirement age from 60 to 62 “is going to be handled in parliament,” Hassink said. “Legislation dealing with the pension premiums will hopefully go to parliament before the end of the year.”

Did you like this? Share it:
Serious measures ahead to generate more revenue by

Comments are closed.