PHILIPSBURG:--- The chairman of the CFT board Age Bakker assured members of media on Tuesday during a press conference that the 2014 budget is not a "CFT or Skeleton" budget but it is a realistic budget that was approved by Parliament last week. Bakker said the 2014 budget is indeed a tight budget that government has to realize.
Bakker further explained that this is the first time in recent years St. Maarten managed to approve their annual budget this early. He said in 2012 the budget was approved in April while in 2013 in September. He said the CFT did not receive the budget that the Parliament of St. Maarten approved last week as yet. "That budget has to be signed off by the Governor of St. Maarten and then it will be sent to us for our approval. I think we will get that sometime this week and in the next two weeks the media will hear from the CFT regarding the approved 2014 budget." Bakker said that the budget parliament approved last week needed some tweaking and the CFT provided advice to the Minister of Finance who applied the measures they proposed. He said the CFT board also spoke to the Governor of St. Maarten last October about the 2014 budget and asked him to ensure that the Government of St. Maarten took the advice provided by the CFT seriously.
Bakker said he met with Parliament and the Council of Ministers while here this week and he informed them that they cannot add new income to the budget if the legislations are not in place to implement the additional income government adds to its budget. "In the past we allowed this and it created a huge mess and a deficit and that is why we have to ensure that whatever is in the budget is realistic."
Bakker further explained that the economy of St. Maarten has improved but government has to do more to ensure that everyone pays their share of taxes. He said it appears as though there are some leakages in the tax system and he advised government to investigate those leakages.
As for the cuts in personnel cost, Bakker said that the budget is not a CFT budget and it's the government who has to decide where they will make the cuts to balance their budget.
The chairman of CFT board said that St. Maarten will now get the opportunity to borrow and he advised the Council of Ministers to come up with a realistic list of things they want to see done in order to improve the infrastructure on St. Maarten. He said the CFT advised the Council of Ministers to use the opportunity of borrowing to finish the Government Building and occupy it so it will cost government less monies. Another project he suggested that government should work on is the expansion of the St. Maarten Medical Center (SMMC). "I think Health Care is very important and it can be provided here on St. Maarten if the SMMC is expanded and government will save monies by not having to send people overseas for treatment."
Fast action needed on public financial management and tax compliance
Age Bakker (Cft): "Budget 2014 was a race against the clock"
PHILIPSBURG:--- The budget 2014 which was signed into law by the Governor will shortly be presented to the Board of financial supervision (College financieel toezicht - Cft) which is required to give its advice within two weeks. According to Cft chairman Age Bakker, it was a race against the clock to have the 2014 budget adopted in January 2014. Improving public financial management is necessary in order to ensure the timely adoption of the budget in the future.
The Board visited Sint Maarten on January 20 and January 21, which was the second visit to the Wescot-Williams III administration. Meetings were held with the Governor, the Minister of Finance, the Council of Ministers, the financial committee of Parliament and several stakeholders. Main topic of discussion was the 2014 budget and the wish of the Sint Maarten Government to make important capital investments.
2014 Budget
The budget 2014 encountered a delay of one month due to a late start and the work that had to be done to adhere to the agreement between Government and the Cft to balance the budget, and to finalize underlying legislation simultaneously. The Cft approved the request of Government to postpone the submission of the 2014 budget up to January 16th, 2014. This deadline was not met, which resulted in preparations made by the Kingdom Government to give an instruction. In the meanwhile the Governor signed the adopted budget this Monday.
After the adopted budget is submitted to the Cft, the Board will give its advice within two weeks. A positive advice means that the Government of Sint Maarten can borrow for important capital investments, which it could not do during 2013, because the budget did not comply. Necessary capital investments thus had to be financed from the reserves that as a result have decreased significantly. This increased the risk of new payment arrears and has put all major investment projects on hold. Now that a budget is adopted, the country can start working on improving its liquidity position, but also on increasing the reserve position as asked by Parliament.
Tax compliance
As to the contents of the budget, the government has made a considerable number of budgetary reductions in order to balance the 2014 budget. These cutbacks were necessary because the tax revenues realized where lower than that of 2012. This is remarkable, considering that there has been steady economic growth. This growth, however, has not resulted in higher income for the government, and this can only be explained due to lacking tax compliance. Figures show that tax compliance has been decreasing over the past few years. Chairman Age Bakker therefore urges the government to work on ways to improve tax compliance in Sint Maarten.
Public financial management
The Cft expressed its concerns regarding the state of the public financial management. On the positive side it should be admitted that having an adopted budget in January is a big improvement compared to the last couple of years. The financial administration however has a serious backlog which takes up a lot of time which the Ministry of Finance should have used in drawing up the budget of 2014 and the financial statements of 2012 and 2013. Fast improvements are needed to break though this vicious circle.
CFT Press Release
