Stagnant economy leads to lower budget

POSTED: 09/29/11 2:01 PM

St. Maarten – Finance Minister Hiro Shigemoto has announced that the 2012 budget will be at least 10 million guilders less than the budget for 2011. The budget for 2011 tops out at 421 million guilders and based on the minister’s announcement the budget for 2011 will top out at 411 million guilders. The contracted figure is based on the projection by the Central Bank of Curacao and St. Maarten (CBCS) prognosis of little or no growth in 2012.

“The global financial economic crisis especially the uncertainty throughout Europe and the United States is placing great strain on small island nations such as St. Maarten. The global financial economic crisis is not allowing government to add new policies in the 2012 budget when we look at zero economic growth. We are still confronted with challenges coming out of the transition after 10-10-10. The country is facing many challenges such as violent crime, high unemployment among youth just to mention a few. The various ministries have programs and projects that they would like to execute but they need money to execute them in 2012. Unlike the larger countries in Europe and around the world, St. Maarten is totally dependent on the outside world and has to also mitigate the external shocks suffered from this dependency and this too costs money,” Shigemoto said on Wednesday.

He’d add, “Small island nation states around the world are facing the same challenges. Even though the coalition has many new policies, projects and programs, the financial management of the country is priority number one with respect to complying with the financial supervision regulations of having a balance budget. We will continue to look at ways and means to get us through these difficult times and we will come out on top as a country as we have always done when confronted with challenges.”

The minister’s statement comes as ministers and ministries continue the discussion on how best o balance the budget while responding to the government’s core tasks. Some ministries have already submitted revised plans and others have not yet completed the exercise. The next anticipated handling of the budget by the Council of Ministers is October 7.

The continued discussions mean a growing number of days past the deadline, when a budget with no new policy should have been submitted. The date for that submission, as stipulated by the Consensus Kingdom Law on Financial Supervision is August 15. The government has also missed the September 1 deadline in the constitution for submitting one or more drafts of the budget to parliament. An ultimate deadline is December 15, when the country’s approved budget should be sent to the Board of financial supervision (Cft).


Prime Minister Sarah Wescot-Williams also announced on Wednesday that the Council of Ministers will ensure “all money that is possible and available to put towards fighting crime should be put towards fighting crime.” She made the statement as a reaction to sentiments in parliament that the police and judicial chain must be given the financial backing to hire more staff and get more equipment.
“If there’s one ministry that has taken up a large chunk of money, also because of the plan of approach, in the budget of the government it is the ministry of justice. There is not a week that we don’t have a discussion about what other financial options are available to country St. Maarten, because yes crime is an issue and a major concern for government, however there are other areas that we would like to do different things for,” Wescot-Williams said.

Financial picture

The matter of the budget and overall financial picture was also a recent point for discussion between the prime minister and Dutch Minister of Kingdom Relations Piet Hein Donner. A statement by Donner that the Netherlands, like St. Maarten, is going through a period of austerity and had to make hard decisions is not a comparison that Wescot-Williams can agree with.

“You cannot compare where the Netherlands is at this stage and now having to go through a cutting budget exercise and St. Maarten. The Netherlands has built itself up to what it is today and regardless to how far you are, if you talk about cutting it’s going to be an issue, and no area of government lends itself easily to cutting millions of guilders. St. Maarten up to this day has not had the opportunity to build our country to a level where we say, now we can sit down and say you have built this ministry to an extent that you can cut off something now, you can cut off some of the fat and get rid of some of the people. We are by a long shot, not at that level, so that comparison in my opinion does not hold water,” the prime minister said.

That lack of ability to cut “extra fat” is being put down to the fact that the island was not in a healthy financial position when it transitioned to its autonomous status becasuse the finalization of the division of assets was not complete, the new country took over some of the debt of the Netherlands Antilles and the fact that the full 183 million guilders for debt restructuring was not spent.

“I hope my reservations when people would want to portray that St. Maarten basically got a golden handshake when we left the Netherlands Antilles is definitely not that way where finances are concerned. So on one hand we’re being told you should be able to stand on your own two feet, but to even have us getting to that point, to be able to stand up, we were not given that opportunity,” Wescot-Williams said.

The prime minister also pointed out that she has little or no hope that St. Maarten will be able to get any sort of reprieve from the strict financial arrangements agreed to in the final declaration of November 2, 2006.

“If you listen to the sentiments coming out of the Netherlands I doubt that the government, also because of their financial, social and political situation, would be willing to entertain such a discussion. And because of that I think St. Maarten should be given more leeway and maneuvering space in terms of deciding what other sources we can look at to get financial assistance, especially with the larger projects we believe should take place on St. Maarten,” Wescot-Williams said.

Did you like this? Share it:
Stagnant economy leads to lower budget by

Comments are closed.