THE HAGUE--The Committee for Financial Supervision CFT concluded in its half-year report that the finances of the public entity Saba are, once more, in order. The very limited financial leeway is a challenge for Saba.
The CFT report covering July to December 2019 was completed in February 2020 and sent to the Second Chamber of the Dutch Parliament by State Secretary of Home Affairs and Kingdom Relations Raymond Knops this week.
The report focuses on Bonaire and Saba, as St. Eustatius has been exempted from financial supervision since the Dutch government in February 2018 imposed higher supervision on the public entity for gross negligence. The CFT does remain involved in Statia’s financial developments.
Saba scored well in all aspects. Financial reports, budgets and annual accounts were all delivered on time in 2019. The 2018 annual account received a certified accountant’s declaration for both accuracy and legitimacy, for the fifth time in a row.
The 2018 annual account showed a surplus of US $0.8 million. In 2018, Saba was careful with the execution of projects for which the Netherlands provided subsidies later on in the year. The execution of these projects, including the Solar Park at the airport, was continued in 2019.
According to the CFT, the 2019 budget was balanced at $23 million. The third execution report showed $19.3 million in revenues (including the free remittance, special allowances, subsidies and taxes) and $17.5 million in expenditures, which means that there was a positive balance of $1.8 million.
The 2020 draft budget was submitted and approved on time, before the end of 2019. The 2020 budget is balanced and shows a revenue and expenditure level of $12.4 million. The CFT acknowledged that it was a challenge for the public entity Saba to balance its budget. The higher structural cost without an increased free allowance makes its financial manoeuvring room extremely tight.
As a result, Saba had to decrease certain budgetary items such as “unforeseen”, which was lowered from $100,000 in 2019 to $22,000 in 2020. The CFT has advised the public entity to allocate a possible surplus of 2019 to the 2020 budget.
“Saba has indicated that the increase of structural tasks, which are not matched by higher structural means, can create risks for future budget years. Saba has indicated that together with the Ministry of Home Affairs and Kingdom Relations BZK, it will seek measures to mitigate risks regarding the sustainability of the budget,” the CFT stated.
The CFT concluded that Saba’s financial management is in order, as it has been for a number of years already. The certified accountant’s report for five years in a row says it all. Together with the accountant, Saba is executing a number of projects to bring financial management to a higher level.
The financial management projects include the drafting of new procedures and directives, the describing of responsibilities and the actualisation of the existing internal control plan. Also, Saba is busy implementing a number of the accountant’s recommendations.
Saba’s liquidity position in the second half of 2019 increased by about $15.3 million to $40.4 million. Based on the overviews presented by Saba, about $37.5 million is earmarked as special allowances and $0.7 million as free remittance. This results in a balance of $2.2 million in means that can be freely spent.
Bonaire, on the other hand, had initial issues with the 2020 budget, and the CFT concluded in August 2019 that the draft 2020 budget did not sufficient comply with the financial supervision laws. Bonaire had to make some adaptations and clarifications, after which the 2020 budget received approval.
The CFT also found that Bonaire had made too little progress in the second half of 2019 where it concerned financial management. Bonaire does not have certified accountant’s declarations of its annual accounts. The CFT advised having the accountant carry out interim controls several times per year during 2020 to assess the financial management.
