THE HAGUE–The Committee for Financial Supervision CFT, prior to its visit to St. Maarten last week, sent a letter to St. Maarten Finance Minister Ardwell Irion in which it pointed out that it had identified a “significantly lower” budget deficit for 2021: 174 million Netherlands Antillean guilders instead of the projected NAf. 241 million.
“St. Maarten in 2021 received an amount of NAf. 118 million in liquidity support in the form of loans from the Netherlands with zero per cent interest until April 2022. Based on this, a shortage of NAf. 174 million is anticipated, taking into consideration the financing needs in the first half year,” it was stated in the letter dated October 13 which was only published on the CFT website on Tuesday.
The CFT called it “alarming” that the 2021 budget was adopted almost a year later than prescribed by the financial supervision kingdom law RFT. “The CFT emphasises the importance of a timely adopted budget so the government receives the mandate of Parliament before the budget execution.”
Not only the 2021 budget showed a deficit, but also the multi-annual calculation 2022-2024. In the opinion of the CFT, the multi-annual budget was insufficiently explained, and not all anticipated expenditures were included in the multi-annual budget as well as the 2021 budget. This means that the multi-annual budget does not comply with the RFT law.
The NAf. 613 million expenditures of the adopted 2021 budget “significantly increased” compared to 2019 when these costs were NAf. 469 million. “The CFT concluded that some expenditures that were included in the 2021 budget were not realised anymore in 2021, such as the fixed costs compensation of NAf. 36 million. The CFT also anticipates an underspending of the costs of goods and services due to a backlog in realisation.”
St. Maarten allocated an amount of NAf. 83 million for investments in the 2021 budget. “Considering the country’s financial position, the CFT advises to only make the most necessary and urgent replacement investments and investments that fit in the country package. It is unclear to the CFT whether the total of budgeted investments comply with the point of departure.”
The CFT concluded that several recommendations from its advice on the 2021 draft budget were not followed up in the budget. One of these recommendations was the adaptation of budgeted vacancies; also, there was no multi-annual budget for the capital account.
The CFT concluded that there was a discrepancy between the adopted budget and the realisation. The CFT advised taking a number of points into account in the execution of the 2021 budget.
The recommendations are to include the cost of food assistance which has been calculated at NAf. 1 million for the fourth quarter of 2021, lower the fixed cost compensation to zero, lower the personnel cost by NAf. 11 million, lower the budget item goods and services by NAf. 66 million and decrease the budgeted amount for St. Maarten Medical Center (SMMC) by NAf. 5 million.
Lastly, the CFT advised substantiating the total of investments and adapting the investments based on the point of departure that only very necessary and urgent replacement investments are made, as well as investments that stem from the country package.
The CFT noted that it was important that St. Maarten implement the recommendations so the national debt does not further increase. Based on the liquidity support, it is anticipated that government’s debt will increase to NAf. 1.398 billion by late 2021. This brings the national debt quota to 79 per cent of gross domestic product (GDP).
Bron: Daily Herald