From left: CFT Chairman Raymond Gradus; Gregory Damoen (member upon proposal of Curaçao); Julisa Frans (member upon proposal of St. Maarten) and Hans Hoogervorst (member upon proposal of the Netherlands).
PHILIPSBURG--The Committee for Financial Supervision CFT has urged St. Maarten to adopt the 2022 budget amendment and the 2023 budget within the short term.
The 2022 budget amendment contains an amount of NAf. 15.4 million in investments, whereby St. Maarten wants to use the loan subscription by the Netherlands. Targeted investments contribute to sustainable economic growth. Furthermore, the Financial Supervision Act for Curaçao and St. Maarten states that St. Maarten must have an approved balanced current budget for 2023 before December 15, 2022.
CFT said the economy of St. Maarten grew by 8% in 2021. The International Monetary Fund (IMF) expects economic growth of 7.5% for the year 2022. The growth is largely driven by the recovery of tourism. St. Maarten should use this economic recovery in the coming years to improve public finance and meet loan-repayment obligations.
2022 and 2023 budgets
CFT said St. Maarten proposed an amendment to the 2022 budget in June with a reduced deficit of NAf. 99 million on the current budget. The progress report for 2022 shows that the income and expenses are developing more favourably. The Kingdom Council of Ministers has recently determined that a deficit of NAf. 40 million is allowed for the current budget 2022. St. Maarten received NAf. 24 million in liquidity support in 2022. The Kingdom Council of Ministers has also indicated that a balanced current budget must be achieved by 2023.
“St. Maarten must repay a loan of NAf. 73.5 million in 2025. It is therefore important that the country achieves surpluses in 2024 and 2025,” CFT said.
According to the Financial Supervision Act Curaçao and St. Maarten, there must be an established budget before December 15, 2022. St. Maarten has indicated that it will submit a draft budget for 2023 to Parliament as soon as possible, so that the budget can be adopted in time.
Investments
St. Maarten made minimal capital investments in 2022. The 2022 budget amendment includes an amount of NAf. 15.4 million in investments, of which NAf. 10 million for road infrastructure. Targeted investments in infrastructure contribute to sustainable economic growth. St. Maarten wants to make use of the subscription by the Netherlands for these investments. “The CFT therefore urges St. Maarten to quickly adopt the 2022 budget amendment, so that this procedure can be started. St. Maarten also wants to make investments in 2023 and later years. The investments on the capital budget must be matched with the investments that are financed from the Trust Fund. The CFT has insisted that St. Maarten produce a multi-year investment plan and that St. Maarten uses the experiences with the World Bank and the National Recovery Program Bureau in tenders.
Health care, social security
In 2022 St. Maarten took the first steps to ensure the implementation of savings in the healthcare system. The ZV/OV wage limit has been raised and the legislation regarding the introduction of generic medicines is being implemented. The CFT discussed the intended reforms and the importance of a realistic multi-year forecast with the minister of Health, Social Development and Labor. CFT advises St. Maarten to implement the necessary reforms quickly, in order to reduce the deficits of the health care funds and to prevent the country from having to make a structural contribution to the health care funds. For example, the personal contributions of civil servants should be more in line with those of the private sector.
Financial management
CFT said St. Maarten is taking steps to improve its financial management and adopt the annual accounts. “St. Maarten has caught up the backlog with regard to the annual accounts and has cleared various (suspense) accounts. The 2019 and 2020 annual accounts will be adopted in November 2022. The review of the budget process has been completed and an analysis of the financial work processes will be concluded shortly.”
CFT emphasises the importance of implementing and safeguarding the revised work processes as quickly as possible. This way the quality of the financial management can be improved in a structural way. The 2021 annual accounts are expected to be adopted at the end of 2022.
On October 25, 26 and 27, CFT members spoke with Governor Ajamu Baly, the Council of Ministers, Minister of Finance Ardwell Irion, Minister of Health, Social Development and Labor Omar Ottley and the financial committee of the St. Maarten Parliament. CFT also spoke with the representatives of the Steering Committee of the Recovery, Reconstruction and Resilience Trust Fund, the Tax Transformation Steering Committee, the Financial Management Steering Committee and the Social and Health Insurance Implementing Agency.
