Cft: Goedkeuring begroting bepalend voor vooruitgang

Cft: Goedkeuring begroting bepalend voor vooruitgang

Philipsburg – Het College financieel toezicht (Cft) doet een beroep op Sint Maarten om de reeds zeer vertraagde begroting voor 2019 goed te keuren. Deze goedkeuring is nodig om leningen voor bijvoorbeeld het herstel van de luchthaven te kunnen verkrijgen, en om te kunnen beginnen met projecten die de overheidsinkomsten verhogen, zoals de hervorming van de belastingdienst en de verbetering van het financieel beheer. De belangrijkste boodschap van het Cft tijdens dit bezoek: vertaal de plannen in acties en tastbare resultaten.

Sint Maarten beschikt nog steeds niet over een goedgekeurde begroting voor 2019. Het Cft roept het Parlement op om zo snel mogelijk een besluit te nemen over de ontwerpbegroting. Een begroting voor 2019 biedt de overheid een wettelijke basis voor de geplande uitgaven en is een voorwaarde om belangrijke projecten – en dus benodigde leningen – in gang te zetten. Het Cft benadrukt het belang van een versterkte belastingadministratie, welke moet leiden tot de broodnodige structurele toename van de overheidsinkomsten. Deze toekomstige inkomsten kunnen worden gebruikt om de noodzakelijke overheidstaken uit te voeren, de huidige betalingsachterstanden in te lopen en de schuld van het land te verlagen.

De uitvoering van het nieuwe plan ter verbetering van het financieel beheer is vertraagd, terwijl er de afgelopen jaren geen significante vooruitgang is geboekt met het oorspronkelijke plan. Dit gebrek aan significante vooruitgang brengt de overeenkomst met Sint Maarten voor het verkrijgen van een goedkeurende accountantsverklaring over de jaarrekening van 2021, onder druk. Cft-voorzitter Raymond Gradus: “Het Cft dringt aan om de implementatie van deze belangrijke verbeteringen zonder verdere vertraging uit te voeren.”

Andere zaken die tijdens het bezoek van het Cft zijn besproken, zijn de begrotingsuitvoering over 2019, de voorbereiding van de begroting van 2020, liquiditeitssteun en de huidige status van de aanwijzing van de Rijksministerraad uit 2015. Om zich aan deze aanwijzing te houden, moet Sint Maarten zijn tekorten uit het verleden compenseren, zijn betalingsachterstanden wegwerken en het zorgstelsel en de ouderdomsvoorziening van het land verduurzamen. Met betrekking tot dit laatste heeft Sint Maarten voorgesteld om de AOV-leeftijd in 2020 te verhogen van 62 naar 65 jaar. Het Cft adviseert Sint Maarten om te starten met het begrotingsproces voor 2020, zodat er in de komende maanden een concept zal zijn en de verhoging van de AOV-leeftijd daarin kan worden opgenomen. Het Cft spreekt zijn teleurstelling uit over het feit dat de beloofde aanpassing van de pensioenwetgeving nog niet is geïmplementeerd. Verdere vertraging is zeer ongewenst.

De schuldquote van Sint Maarten zal in 2019 naar verwachting stijgen van 37 naar 51 procent. Deze stijging is vooral een gevolg van de voorgenomen lening voor kapitaalsinvesteringen, de lening voor het herstel van de luchthaven en de liquiditeitssteun. Het Cft zal de ontwikkeling van de schuld/BBP-ratio volgen om deze op een duurzaam niveau te houden.

Nederland heeft in 2010 afgesproken om 70 procent van de uitstaande schuld van de voormalige Nederlandse Antillen over te nemen. Tegelijkertijd werd de Rijkswet financieel toezicht aangenomen en werd het Cft opgericht om de landen Sint Maarten en Curaçao te helpen bij het voorkomen dat een onhoudbare schuldpositie zich opnieuw zou voordoen. Als gevolg van de rijkswet geldt een lage rente voor de uitstaande schulden en nieuwe leningen voor kapitaalinvesteringen. Deze rente is aanzienlijk lager dan de rente in andere Caribische landen. Sint Maarten heeft dus meer financiële vrijheid om middelen in te zetten voor de behoeften van de bevolking van Sint Maarten.

Het Cft vraagt ​​wederom de aandacht van de overheid voor de afronding van de jaarrekeningen van de voorgaande jaren om het verantwoordingsproces af te ronden. De jaarrekeningen over 2013 en 2014 zijn goedgekeurd door het Parlement, maar moeten nog door de gouverneur worden getekend. De jaarrekeningen 2015 en 2016 zijn nog niet aan het Parlement voorgelegd en de jaarrekeningen van 2017 en 2018 moeten nog worden opgesteld.

Het College van financieel toezicht Curaçao en Sint Maarten bezocht Sint Maarten van 24 tot 26 juni en hield vergaderingen met de gouverneur, de Minister van Financiën, de Ministerraad en de programmabeheerder voor de hervorming van de belastingdienst. 

 


 

 

Welcome, dear members of the press. This morning we conclude our visit to the Windward Islands. On Monday we had our visit to Saba and yesterday we had our meetings on Sint Maarten where we spoke with the governor, the Minister of Finance, the Council of Ministers, the program manager for the reform of the tax administration and the Dutch representative on Sint Maarten. 

I would now like to give you a summary of what we have discussed during this visit on Sint Maarten and share with you the main topics.

 

  • The draft budget 2019

 

Sint Maarten presented a revised draft budget for 2019 in February this year, followed by an amendment to the budget in May. The amendment was mainly needed due to further delay in the pension reform for civil servants and necessary costs for the justice department, which were not included in the revised budget. The current draft budget, including amendment, shows about 483,8 million guilders in expenses. 

During the last couple of visits of the board, the Cft stressed the importance of expense cutting and income increasing measures. Sint Maarten put in the budget of 2019 an amount of 2.5 million guilders for cost savings and an amount of 3 million guilders for additional income generation. However, the budget does not explain how the government is going to enforce these measures. Since October 2018, the Cft advised to formulate these measures. Moreover, the pension reform, which was initially planned to be introduced on January 1st 2019, is now projected to be enforced per august 2019. By delaying the introduction of this reform, Sint Maarten has forgone approximately 8 million guilders for 2019.

The process of obtaining an adopted budget for 2019 is taking longer than expected. The amended budget was submitted for approval by parliament on the 14th of May. As the Sint Maarten government also has stated, will further delay of the budget cause a hold up in many key areas, such as:

  1. delays in the process of obtaining the much-needed loan for the airport. Importantly, unless the budget is approved, the critical funding for the airport reconstruction cannot be obtained.  
  2. delays in the investments needed for the major part of the projects to restructure the tax office and improve financial management.

Furthermore, the delay in the 2019 budgeting process also puts the effectiveness and efficiency of the 2020 budgeting cycle at risk as this process and the preparations by the different ministries should have already been started by now. And last but not least, seeing that we are halfway in 2019, having an approved budget is more than appropriate. 

 

  • Reform of the tax administration

 

The tax reform project was planned to commence in January 2019. We are now in June, and this project, with a total duration of 3 years, is thus delayed. During our previous meeting as board, we have stressed the importance of finalizing and implementing the plan in order to realize the increase in tax compliance for example in the amount of 7.5 million guilders that is included in the 2019 draft budget. The Cft emphasizes the need for speedy measures in order to achieve the goals set for 2019 and beyond. After all, this reform is needed to gain the much-needed budget balance soon and surplus on the budget in the near future in order to solve the payment arrears and lower the debt.

 

  • Financial Management

 

With quite concern, we have noticed that little to no progress was made with regards to the improvement of financial management. To paint a clearer picture, in 2016 the Council of Ministers approved an improvement plan consisting of 12 projects to be finalized in 2018. Of these 12 projects only 1 has been completed thus far. 

A new financial management improvement plan has been approved by the Council of Ministers in April this year. As it is true that the major investments for this plan are linked to the approval of the 2019 budget, there are areas in this plan that can be started immediately. The Cft therefore advised to do a detailed analysis of what can be achieved in the short run. It is time for concrete plans and, more importantly, action. 

We further emphasized that the financial management process encompasses every aspect of the budget cycle. Sound financial management also positively impacts the operations within all ministries. There is a direct relationship between financial management, government finances and public service delivery.

The Cft and the Minister of Finance of Sint Maarten made the agreement that Sint Maarten will work towards a clean audit opinion on the 2021 financials. We expect that government will do all possible to ensure improvement in the quality of the financial statements and financial management.

 

  • Financial statements 

 

The importance of having timely and correct financial statements, is also a repeated remark from the Cft. As stated before, there is still a lot of improvement to be made in this area. The budget and reporting cycle for the years 2013-2018 has not yet been completed. So, the last approved year report is of 2012. 

    • The financial statements for 2013 and 2014 need to be ascertained by the Governor.  
    • The 2015 and 2016 financial statements are pending adoption by Parliament. 
    • The 2017 financial statements still need to be finalized and audited, and
    • The 2018 financial statements still have to be drafted.


According to the latest planning received from the Ministry of Finance, the 2017 financial statements will be presented to parliament in the third quarter of this year. The Cft stresses the importance of clearing up the backlog. Certified financial statements in a timely manner is of urgent importance for a clear and proper budget cycle. 

 

  • Budget performance 2018

 

The fourth quarterly report of 2018 shows a preliminary deficit of 90 million guilders, which is considerably lower than the budgeted deficit of 197 million. This favorable outcome is partially explained by higher tax income and lower personnel expenses. The income from wage tax, turnover tax and profit tax were all higher than budgeted. In 2018, the realization with respect to wage tax was 26 percent higher than budgeted. The higher level is a sign of the recovery of the Sint Maarten economy, and the effects of the hospitality projects from government and the World Bank.

In addition to the quarterly reports, the Cft receives monthly reports by the ministry of finance. The Cft commended the Minister of Finance for timely submitting these monthly reports but stressed that the other ministries also make use of these reports for their own monitoring.

 

  • The debt position

 

At the start of 2019, the debt ratio for Sint Maarten was around 37 percent. In the 2019 budget, loans are planned for capital expenditures, the loans for the airport and for liquidity support from the Dutch government. Taking into account these proposed loans, the debt ratio is expected to increase to 51 percent. If the loans for the hospital are included this will rise to 56 percent.  This week the Minister of Finance has raised his concerns in the parliament about this raising debt level. Due to the vulnerability of Sint Maarten’s economy, actions are needed to lower the debt level in the near future and implementing the tax program is therefore of upmost importance.

 

  • The role and the task of the Cft

 

To understand the role and tasks of the Cft, we must first understand the historical context. In 2010, the Netherlands agreed to come up with a solution for the unsustainable debt of the Netherlands Antilles in order to give the countries Sint Maarten and Curacao a healthy financial starting position. Of the outstanding debt, the Netherlands took over 70 percent in the amount of 3.4 billion guilders. The remaining debt was converted in a loan with a low interest rate. At the same time, the kingdom Act on financial supervision (Rft) was adopted and the board of financial supervision, the Cft, was founded to prevent that the countries Sint Maarten and Curacao would again find themselves in an unsustainable debt position.

This is what the Cft works for. As the Cft we continuously provide recommendations to Sint Maarten to maintain a balanced budget and to keep the debt from rising again. A low Dutch interest rate applies for the current outstanding debt and new loans for capital investments. This interest is significantly lower than the interest rate in other Caribbean countries. While for some other countries in the Caribbean the interest payments can reach 25 percent of the income level of the public sector, the interest payment for Sint Maarten and Curacao are currently approximal 2.5 percent of income. In the Rft these interest payments are maximized to 5 percent, which is not binding yet. Importantly, while other countries have to spend money on interest, this money can used to provide better services for the public. The Rft and also the recommendations of the Cft are thus without a doubt in the interest of the public.

 

  • The 2015 instruction

 

In November 2018 Sint Maarten reported on how the country has complied with the Kingdom Council instruction up until now. The Cft issued an advice in December accompanying this letter at the request of the State Secretary of the Interior and Kingdom Relations. In this letter, the Cft advised the Kingdom Council to keep the instruction enforced, but to also adjust the timespan and make additional agreements. Further agreements are still needed to be made, based on the Kingdom Council’s decision on the continuance of the instruction. The Cft is awaiting the communication about this and will contact the State Secretary.

As Sint Maarten is facing an ageing society, measures should be taken to make health care and public pensions sustainable and pass them on to the next generation. As Sint Maarten is the only country in the Kingdom with a pension age lower than 65, Sint Maarten has proposed to increase the AOV age from 62 to 65 years in 2020. The Cft advised this change in order to increase the sustainability of the fund. The Cft expects government to take the necessary steps in order to meet this date.

 

  • Closing comments

 

In our previous visit I have concluded my statements by calling for action. It is with profound concern that I must conclude that things are not moving at the desired speed. Overall, the country Sint Maarten is lacking progress. In our meeting with the Council of Ministers we have repeated the following urging requests:

    • Pass the budget for 2019 as soon as possible and ensure that the cost-cutting and income increasing measures are defined and implemented among which the pension reform.
    • Start with the 2020 budgeting process so there will be a draft in September and include an increase of the AOV age from 62 to 65 years.
    • Take speedy steps in reforming the tax administration and improving financial management.

 

I seriously hope that the budget will pass this week and important projects are started, in the interest of the people of Sint Maarten.


 

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