St. Maarten Council of Ministers, Cft have no detailed agreement on plan of approach

POSTED: 03/24/11 12:49 PM

Cabinet changes intentions on request for budget aid

St. Maarten / By Donellis Browne– Prime Minister Sarah Wescot-Williams and Finance Minister Hiro Shigemoto both affirmed Wednesday that the government has no agreement with the Board of financial supervision (Cft) on a joint plan of approach for the budget. The finance minister also confirmed that there is no request for a part of the 78 million left over from the 183 million in debt relief for St. Maarten, because the government had changed its mind about how the money should be used.

Both moves signal a backing away from original intentions as stated by the Finance Minister in statements on both these issues.

Shigemoto announced the agreement on the plan of approach in a March 3 statement that also gave the seven measures the Cft proposed. In his release Shigemoto said, “We (government and the Cft) continue to have a difference of opinion, which cannot be bridged, which is the economic growth index, however we have come up with a plan of approach that would allow the government to present a balanced budget within a reasonable period of time.”

The body also issued a statement of its own the same day stating there was an agreement and went as far as informing Minister of Home Affairs and Kingdom Relations Piet Hein Donner of an accord in a letter dated March 3. On Wednesday both Wescot-Williams and Shigemoto asserted that there is no agreement beyond parties stating they will create a joint plan of approach for the 2011 Budget.

Asked about it on Wednesday night Shigemoto said, “I had no mandate to agree on specific proposals so there is only an agreement to jointly create a plan of approach. What is still being discussed based on the proposals that the Cft put forward is the content of that plan of approach. Once we got to the specifics of the plan of approach I told the Cft I would have to go back to the Council of Ministers. They gave me a list of their proposals and I circulated that for comments to my colleagues in the Council of Ministers and sent the remarks to the Cft. The Cft then wrote an email back with an official letter stating why they don’t agree with each of the comments that were put forward, to which the Council of Ministers replied with a detailed breakdown of our position.”

Speaking at the Council of Ministers press briefing earlier in the day Wescot-Williams said, “I cannot speak for the minister on what his release stated. Naturally, the minister had several discussions with the Cft, also discussions regarding the proposal they had on the table. From what I have understood, not withstanding those discussions, the Minister indicated that the formal response from the Council of Ministers would have followed.”

The prime minister said the government had also informed the Cft in a meeting on February 24 that their official response to the proposals of the Cft on the content of the joint plan of approach, would be delayed because she was flying to New Caledonia the very day the Council of Ministers met with the Cft. This was a reply to the body’s position that they would be writing Minister Donner to inform him of the status of the Budget 2011 as prescribed in the Consensus Kingdom Law on Financial Supervision for Curacao and St. Maarten.

“We indicated that we understood but that we needed time to reflect on what they were proposing and I remember specifically, just before the closing of the meeting, making the comment that I would not have been on the island for approximately a week and that the timing of our response needed to take that into consideration. The formal communication with the Cft was not sent before the 11th of March,” Wescot-Williams said.

Because of this fact the prime minister was “shocked” when she received a March 15 letter from Minister of Kingdom Relations Piet Hein Donner via the Cabinet of the Minister Plenipotentiary Mathias Voges in which Donner said he’d like to use their upcoming meeting to discuss how to translate the Cft’s proposals into a policy that he would present to the Kingdom Council of Ministers.

“I realise that the Minister, at that time, was not aware of our letter regarding the proposal of the Cft. In fact in the Minister’s letter dated March 15 the Minister went out from the premise that there was an understanding between the Cft and the Council of Ministers of St. Maarten with regards to the proposals for the budget of St. Maarten for 2011. I had to inform the Minister that was not the case, not the proposal as presented, but rather the position as presented by the Council of Ministers of St. Maarten was communicated to the Cft in a letter dated March 11. In that letter we put clearly on the table how we, as Council of Ministers, felt about the budget 2011 for St. Maarten, how we felt about the proposal of the Cft that the budget should be brought back to 416 million guilders, which is something we termed irresponsible if we were to do that just like that and then we also went in specifically on some of the points put forward by the Cft,” Wescot-Williams said.

Cft’s proposals

The proposed plan as put forward by the Cft and also publicized by the Minister includes setting the budget at 416 million guilders and having Parliament approve a budget of that size within four weeks, that the minister will exercise increased financial supervision by appointing a civil servant to closely monitor and control whether individual expenses which exceed 5, 000 guilders are according to and comply with the financial management rules in the Comptabiliteits voorschriften and the Consensus Kingdom Law on Financial Supervision for Curacao and St. Maarten.

The plan also includes an obligation for the Council of Ministers to inform the CFT when advices with financial consequences for the country are not in line with budgetary rules and regulations and to adjust controls where necessary, that the Cft is provided with bank statements to substantiate how the budget process is working and that the Cft should be given the annual accounts of the government owned companies up to what is allowed by Book 2 of the Civil Code. The plan of approach also included finalising a list of critical vacancies, installing a special commission to monitor the agreements and report to the Minister of Finance, the Council of Ministers and the Cft and the Minister wanted the Cft to establish an office here so the working relationship could be improved and the government will have easier access to experts.

Points of dispute

The prime minister has informed both Minister Donner and the Cft’s Board that there was no agreement between the government and the secretariat on the proposals that were put forward. Based on the discussions, the prime minister expects the Cft to redraft their proposal on the budget 2011.

“The matter remains, and this pertains to the proposal for the budget to be brought back to 416 million guilders, which would be irresponsible for government to do just like that and basically the difference between the amounts we have projected and the ones of the Cft thinks is realistic has to do with the components of using the reserves that the Country St. Maarten has built up for incidental expenditures and the proposal for St. Maarten to make use of a sort of advance on the money that will be coming to St. Maarten in the context of the division of the assets of the Netherlands Antilles,” Wescot-Williams said.

Even though that advance is tied to the process of finalizing the liquidation committee, the prime minister expects that the Finance Minister will be able to work out an arrangement with his counterpart in Curacao Jorge Jamaloodin. The matter of the reserves is tied to government submitting the annual accounts of the government owned companies so the Cft can determine if there are “no hidden risks for Country St. Maarten because of the financial situation at one or more government owned companies.”

The type of monitoring the Cft wants to establish is a central issue for the government in terms of the Cft’s proposal. The government believes allowing the Cft to execute their proposal, which the Finance Minister agreed to, would give them tasks that institutions like the Corporate Governance Council, the General Audit Chamber and the Council of Advice should be carrying out in their role of providing checks and balances.

“We are saying allow those institutions to do their job and the Cft what they are authorized to do according to the law,” Wescot-Williams said as she asserted St. Maarten’s commitment to having the Cft function.

The government also believes that the perception at the Cft on how financial management is done in St. Maarten is incorrect as they believe the Ministers have complete responsibility for the budgets. This is incorrect as the Ministry of Finance is still the central point for coordinating revenue collection and making payments. The prime minister said the Cft also incorrectly believes that civil servants are unaware of how, when and to whom they should report on financial matters.

The government also does not agree that a team of experts be hired to help fill the critical vacancies. The Council of Ministers believes the structure they have heard thus far will not accomplish the goal the government believes the Cft envisions.

“We don’t want to get into non-structural solutions as far as the building of country St. Maarten is concerned. The process to fill these vacancies is one that has been started by government and it goes in the same fashion that where we have institutions because of the urgency and the deadlines to come to our budget, don’t let us go and put the workable situation aside to go and fill holes for a certain period of time. Let us deal with the structural and sustainable setting up and manning of the different departments and ministries. If we’re going to talk about the structural manning and the structural management of these ministries then the Government of St. Maarten is open to how this can take place and it would be wrong to believe that by just taking and sending in a group that the problems are going to be fixed. It hasn’t worked in the past and it’s not going to work now,” Wescot-Williams said.

She added, “They will have to re-write some of the things that they put in their proposals and I say it cautiously because I have realized in the discussions recently  that there are a lot of impressions that turn out not to be reality so I’ll wait and see what comes out of that discussion on Friday.”

Reallocation

The prime minister also said Minister Donner had began their March 17 meeting with the incorrect perception that St. Maarten wanted to use part of the 78 million guilders left over from the debt relief program to balance the budget alongside doing a number of other projects. Donner’s premise is correct because in a statement on March 13 the Finance Minister said he’d sent Donner a letter dated March 10 requesting that St. Maarten receive part of the 78 million to balance the 2011 budget.

“St. Maarten would like to have access to the remainder of the funds to go partly towards the 2011 budget and other socio-economic national development initiatives,” Shigemoto stated in his March 13th release.

When the matter was put to both the prime minister and the finance minister on Wednesday the latter revealed that the original intention was to make the request, but this was scrapped and removed from the letter of March 10.

“We originally thought about using the money to balance the budget. Then we thought to secure agreement with the Cft to use 32 million guilders from the government’s reserves and then we would use money from the 78 million to replenish the reserves and do the projects. Eventually we decided to give the funds a destination and that is the projects that were placed in the letter,” Shigemoto said Wednesday confirming the original intention had changed.

Earlier in the day Wescot-Williams said, “I need to stress here that in our letter regarding that 78 million guilders, we have been very clear with respect to why we believe the money should still come to St. Maarten and we have not asked for that money to be put into the budget for St. Maarten for 2011. We have specifically within the context of the 78 million guilders remaining debt relief for St. Maarten highlighted areas that we believe this money could be put towards.”

The areas the prime minister highlighted include using the money to repay the debt for the coinsurance of family members of SVB cardholders, purchasing land to build houses, building a waste to energy plant that will eventually lead to a cleanup of the Philipsburg landfill and the comprehensive analysis that will lead to a definition of the core tasks of the government. Shigemoto’s full list also includes the creation of a youth detention and rehabilitation facility.

Getting the money for any purpose is now a moot point as Donner has said that getting the money is not possible because the debt relief is tied to a specific time period and specific purpose – debts up until December 31, 2005.

Hope

All things in the current discussion on the budget considered the prime minister remains hopeful a solution can and will be found.

“The bottom line being that I believe we can get out of these matters pertaining to the budget and that then this can be reflected in the budget,” the prime minister said on Wednesday.

 

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