The Committee for Financial Supervision CFT.
PHILIPSBURG--Significant changes to the draft 2019 budget necessitated the postponement of its handling prior to approval by Parliament on Tuesday afternoon.
Finance Minister Perry Geerlings requested the legislature to hold off on the dealing with the draft budget, that is already more than six months overdue, until the approval to the changes is received from the Committee for Financial Supervision CFT. The changes were sent to the Council of Advice and the Committee for Financial Supervision CFT for their advice. This process should take about three weeks.
After receiving the advices, government can then send the changes on to Parliament for handling together with the draft budget.
The changes result from an instruction from the Dutch government related to the Ministry of Justice and a cost reduction in the salaries for Members of Parliament. These changes were tied to liquidity support desperately needed by the local government for 2019 to fill the gap of the some NAf. 70 million deficit. If the changes were not made, the liquidity support would disappear leaving the country to ail further.
The changes made and approved by the Council of Ministers on May 7 puts budget investments much lower now because of the delay of the large projects related to the tax organization and financial management of government. This results from the rearranging of the financing proposal for these projects by the Dutch government.
The St. Maarten government is to no longer finance the new tax building via its own capital account, but has requested a grant from the Recovery Trust Fund due to the severe hurricane damage to the old buildings.
For the capital account, government will make use of the NAf. 40 million – the maximum amount allowed by the Dutch government.
On the expenditure side of the capital account, another NAf. 27 million will come from the Development Policy Operation (DPO) in cooperation with the World Bank. The remaining NAf. 27 million will come from other sources such as the remaining balance available for investments and subsidies from third parties, etc.
The renewed capital account 2019 is in balance as the law prescribes, said Geerlings.
The collective sector is close to NAf. 1 billion in debts by the end of 2019. Those are debts that will have to be repaid in the future, and with that amount the country has reached the normal limits of what is seen by CFT and the International Monetary Fund (IMF) as bearable compared to the country’s gross domestic product (GDP).
Originally the Kingdom Council of Ministers put a ceiling on the expenses for the budget 2019 at NAf. 475 million. However, CFT in collaboration with the Ministry of Finance, advised the Council to accept a ceiling amount of NAf. 478.8 million in expenses.
Explaining the situation to MPs, Geerlings said the risk remains that CFT won’t accept the further raise of the ceiling as a result of the note of change adopted by the St. Maarten government that will put the ceiling now at NAf. 483.8 million in expenses. That would probably lead to the CFT advising the Council to keep the ceiling of NAf. 478.8 million. If that occurs, the draft budget will be NAf. 5 million above the amount already approved and could target an instruction for more cost reduction avenues.
The real situation of this country’s financial status is that it is “dependent on loans from the Netherlands as liquidity support to be able to execute the budget and keep government functioning,” said Geerlings.
Due to that dependency on the liquidity support needed to keep government going, Geerlings said it seems logical that the Kingdom Council of Ministers “keeps an eye on our budgets and spending. Each million that we must be lending, makes our national debt higher.”
Geerlings added that “what government does not understand is the political pressure from the Netherlands to make changes in our budget as an autonomous country within the Kingdom, just because they believe we should adhere to their way of thinking. This political pressure is beyond reasonability.”
Geerlings, in leading up to his request for hold off on the budget handling, said the country is “still in a state of crisis after the hurricanes hit us so hard in September 2017 … our society is still struggling with unemployment, loss of income, roofs to be repaired and all kinds of other social effects that influence the lives of our people.”
