By Suzanne Koelega

THE HAGUE–The financial supervision in the Dutch Caribbean has proven beneficial and also by and large a success: in 2016 all three countries and the three public entities for the first time complied with the budget norms.

Chairman of the Committee for Financial Supervision CFT Curaçao and St. Maarten, the CFT Bonaire, St. Eustatius and Saba and since 2015 also of the Committee for Financial Supervision Aruba Age Bakker is leaving per July 1, after more than five and a half years. He looks back at an intensive, but positive period.

The financial supervision, which was installed in 2010, has contributed largely to the budget discipline. “Political leaders are continuously forced to carefully look at revenues and expenditures,” said Bakker in an interview with The Daily Herald.

“The islands have made immense progress. There is more transparency and people can follow what is happening. There is a lot to be thankful for. We have had the privilege to work with strong Ministers of Finance such as Richard Gibson of St. Maarten, José Jardim of Curaçao and Angel Bermudez of Aruba.”

One of the first things Bakker did when he became Chairman on December 1, 2011, was to have a meeting with former Prime Ministers of the islands to ask them for advice on how to achieve the best results. “They all advised me to dare say no and to always be clear as this would be very much valued.”

Luckily, Bakker and the CFT did not always have to say no. “The difficult question is when to say yes. By saying yes when merited, we were able to create trust. We have given approval for the countries to attain sizeable loans. Yes, the supervision is strict, but there is also a reward when the countries comply with the norms. The stick and carrot principle. By borrowing via the Netherlands at very low interest rates St. Maarten annually saves about NAf. 25 million [1.3 per cent of GDP, Ed.] which can be used for policies which benefit the population instead of being paid out to investors. We are not simply a bookkeeper, but we promote better finances that ultimately benefit the island and its people.”

A prerequisite for good financial management, the CFT together with the islands have been working on solid government finances; however, flanking policy has been somewhat lacking: education and social policies, and incentives to boost the macro-economic development and improving the investment climate. Stronger economic growth is very necessary to create jobs and to improve the spending power of the people.

Heavy task

St. Maarten still has to work on its financial management. “That is a heavy task. We have discussed with Minister Gibson how an approved audit report can be achieved. The goal has been set at 2020,” said Bakker, who explained that an approved annual financial statement is very important to determine whether the revenues and expenditures ended up in the right place. “It provides security for the tax payer and the Parliament.”

The strengthening of the St. Maarten Tax Office is another high priority. Minister Gibson is preparing a comprehensive plan to invest in the Tax Office and related IT, which should be ready before the end of 2017. The Tax Office mostly works non-digital, and many of the problems facing this department date back to the time that it resorted under the Government of the Netherlands Antilles.

The plan that is being prepared for the Tax Office and the IT involves a large investment, for which a loan of NAf. 30 and 35 million will be needed. The CFT will have this business case assessed by an external expert, and once approved, St. Maarten will be able to get a loan through the Netherlands.

Tax compliance

Tax compliance is an issue in all countries of the Kingdom, but especially in St. Maarten where compliance is the lowest of all, said Bakker. “That is very aggravating for those people and companies that do pay. In Curaçao and Aruba the tax compliance has improved, and as a result they generate more revenue,” he said.

“St. Maarten has been a country now for almost seven years, and it is high time that things improve in financial management and that everybody pays their fair share of taxes. There are many people in St. Maarten who want to do good, but not everyone has that mentality.”

According to Bakker, a change of attitude in St. Maarten is needed to act accordingly. “There should be a social dialogue among the people on how they want to function as a nation of its own. What are our norms and values where it comes to attitude, civil responsibility and good governance. What do we find important, what are our goals? This would also help address issues of integrity and the fight against corruption.”

Right attitude

Having the right attitude is also important for those in government. “The Ministers indicate their wish list on the capital account, and it is up to the Council of Ministers to set the priorities, what is really necessary. That is also an attitude, government is about making choices and setting clear priorities. Politicians have the tendency to show off to the voters what they do for their constituencies instead of doing what is best for the country as a whole.”

Besides the Tax Office challenges for St. Maarten in Bakker’s opinion are the modernisation of legislation, the health care system and the pension system. He said that there are certainly possibilities for cooperation with the Netherlands on a macro-economic level. The end result should be a St. Maarten that is institutionally stronger and has a clear long term view where its heading for.

Asked about the wishes of some Dutch Caribbean politicians to do away with the CFT and to replace this by a budget chamber, Bakker said that the latter could provide support in the budgetary process, but that it was not the same as supervision.

“International credit rating agencies and foreign investors always ask whether there is financial supervision. Countries like St. Maarten have to carefully consider this. If you want to radiate quality assurance, you have to realise what you give up and you have to ask yourself whether you are strong enough to do that on your own. I think that a form of supervision is a good thing, especially for a young country,” he said.

As for Saba, Bakker said that it was obvious that the island was set on having things in order, and this has been working out well so far. There is tranquillity in government; there are clear, defined plans and a vision.

“As a result the Netherlands is willing to do more, to give more support. Saba has the will to do things on its own. Saba remains vulnerable as a small island, but they are very well aware of that. Saba is always positive and constructive, and that yields results,” said the CFT Chairman.

Unrest in Statia

St. Eustatius on the other hand is affected by an “immense” unrest in government, and that also has its effect on the relations with the Netherlands which at the moment are strained. St. Eustatius is under preliminary financial supervision from the Minister of Home Affairs and Kingdom Relations.

But, it is not all bad news: St. Eustatius has compensated its deficits of 2014 and 2015, and with outside help the financial management and budget process are being improved. “St. Eustatius has stuck to the financial supervision norms.” However, the first 2017 budget was turned down by the Minister and the amended version is still awaiting approval.

Bakker said he hoped that the Netherlands and St. Eustatius would soon reach an agreement on the NuStar contract, followed by a speedy approval of the 2017 budget. “That is in the interest of everyone. There are no winners here. We cannot continue in this manner. Hopefully there will soon be light at the end of the tunnel.”

Looking back at his tenure of CFT Chairman, Bakker said that at the end of his second term it was time to pass on the torch to a new person. His successor Raymond Gradus has been appointed CFT Chairman per July 1. “I did this job with a lot of love every day, and I will miss it immensely.”

The end of his task at the CFT in no way means that Bakker, born in 1950, will become idle. As an extraordinary Member of the Council of State, he is involved in preparing at the request of Dutch Parliament an advice on the euro, and he is still the Chairman of the Supervisory Board of the Water Authority Bank (“Waterschapsbank”), a large bank in the semi-public sector, and a Board Member of the large pension fund “Zorg en Welzijn.”

“My agenda is full enough, but in the past years and during our many visits I have become attached to the Dutch Caribbean islands and their wonderful people, and I will surely be back,” said Bakker, who will visit all islands later this month as part of a farewell tour.

Bron: Daily Herald