The press conference by the Committee for Financial Supervision CFT at the end of its working visit (see related story) sounded relatively upbeat. For one thing, the 2018 budget deficit originally estimated at NAf. 254.7 million that was later reduced to and approved at NAf. 197 million has now been adjusted downward to NAf. 144 million.
Mind you, that is still a huge amount to be in the red, but completely understandable due to the continued severe socio-economic impact of Hurricanes Irma and Maria in September of last year. A deficit of NAf. 88 million is still expected for 2019, the third consecutive year in which liquidity support in the form of a soft loan from the Netherlands will be required.
CFT’s advice to be cautious about borrowing more money and utilise the Dutch-sponsored Trust Fund at the World Bank for reconstruction projects is therefore well-taken. That’s also a concern regarding the National Recovery and Resilience Plan (NRRP) with a total price-tag of US $2.3 billion.
With the 550-million-euro Trust Fund and expected insurance payments, that leaves a gap of roughly US $1 billion. This probably makes sense in terms of the country’s needs, but it would seem prudent to focus on effectively spending the considerable means that are readily available for now.
From 2020 the intention is to go back to budgets with a surplus. That is important to cover still-outstanding financial shortages from 2010 to 2014 and solve existing payment arrears.
Draft legislation recently submitted to Parliament to increase the public sector’s pensionable age from 60 to 65 was called a step in the right direction. However, steps must follow to keep the old age pension AOV and healthcare system structurally affordable too.
All in all, it appears St. Maarten has been doing a pretty decent job regarding its financial household under extremely difficult circumstances. Cost-saving measures and improved tax compliance nevertheless remain key to a stable budgetary future.
