Published On: Mon, Jul 4th, 2016

Age Bakker (Cft): “Additional effort required to realize the 2016 budget”

cftPHILLIPSBURG - On June 28 and 29 the Board of financial supervision Curaçao and Sint Maarten (Cft) visited Sint Maarten. During this visit, Cft emphasized the importance of realizing the approved 2016 budget at the end of the year. This will require additional effort from the Council of Ministers but, as the chairman of Cft Age Bakker stated. This will not be impossible to accomplish. Furthermore it was stated by Cft that priority should also be given to the requirements of the targeted instruction and the improvement of the financial management. The latter also pertains to approving the annual statements of 2012 to 2015 and adopting the budget for 2017 in time.

During its visit, the Cft met with the Governor, the Council of Ministers and members of Parliament. Also Social and Health Insurance SZV was visited. The Board discussed the execution of the 2016 budget with the minister of Finance, Mr. Gibson. During this meeting Cft expressed its concerns about the results so far. With a shortfall in expenditures, but an even larger shortfall in income, the results in the first quarter netted ANG 8.5 million less than budgeted. Government revenues picked up somewhat in April and May but are still running substantially behind projections. Cft stressed the importance of ensuring additional revenues, including realizing projected casino fees due at ANG 12.3 million and realizing dividend payouts by government owned entities. Even so, government needs to take structural measures to ensure sufficient income in future years in order to provide basic public services to the population, especially since income through taxes has been deteriorating lately. Cft was informed by minister Gibson about much needed plans to reform the tax administration with a view to strengthen the tax base and improve compliance. Cft was informed by minister Lee on plans for a new Sint Maarten Medical Centre. It was agreed that establishing a new medical centre needs to go hand in hand with reform of the national health care system since the quality and cost effectiveness of health care is not only about ‘bricks’.

The budget 2016 also foresees in compensation of fiscal deficits of previous years and also presents a solution for the payment arrears to APS and SZV. Both requirements are included in the targeted instruction that was issued by de Kingdom Council of Ministers in September of last year. As Age Bakker emphasized during the meetings, it is necessary that the government takes concerted action in order to meet the requirements of the targeted instruction. This will be difficult but certainly not impossible for Sint Maarten to accomplish. This also includes the agreed transfer of the government building to SZV.

The fourth requirement of the targeted instruction concerns the reform of both the pension scheme and the healthcare system. During the meeting with the Council of Ministers Cft pointed out that initial steps have been taken in reforming the pension scheme, although final reform proposals still need to be agreed upon. Cft also stressed the importance of reforming the healthcare system no later than the end of the year. Such reform should entail the introduction of measures including a basic health insurance package, the introduction of own risk and substantial savings on medicines by prescribing generic drugs and renegotiating terms for the import of medicines. Meeting the requirements is necessary for ensuring the long-term viability of the pension and health care systems while preserving sustainable government finances in the long term. In that respect, Cft chairman Bakker also addressed the budget for 2017. In the 2016 budget a multi-annual estimate for 2017 and the two consecutive years was included. This provides a solid base for preparing the budget for 2017. Cft reminds that the budget needs to be approved by Parliament before the end of this year.

Besides the targeted instruction, and thereby acknowledging the efforts of Sint Maarten to meet those requirements, Cft pointed out that attention should be paid to improving financial management. Very little progress is being made on that matter. In that respect, Cft advised Parliament to approve the annual financial statements of 2012, 2013 and 2014 as soon as possible.

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