Raymond Gradus (Cft): “Additional measures to get the economy going and decrease expected deficit 2018 needed”



PHILIPSBURG, Sint Maarten — From the 5th of February until the 9th, the Board of financial supervision Curaçao and Sint Maarten (Cft) visited the windward islands, amongst which Sint Maarten. The main topics of discussion on Sint Maarten were the expected deficits, the precarious liquidity position and the weak state of financial management. Cft Chairman Raymond Gradus: “While a deficit is inevitable, Sint Maarten should keep the expected deficit 2018 to a minimum”. While rebuilding Sint Maarten and get the economy rolling, government should also improve financial management and solve the lasting IT-problems.

During its visit, Cft met with the Governor, the Council of Ministers and the Financial Committee of Parliament. Cft was impressed with the resilience the people of Sint Maarten have shown during these past few months. Cft chairman Gradus: “Though Sint Maarten evidently is getting back on his feet, there are still many challenges ahead”, hereby also referring to the vulnerable economic and financial position of Sint Maarten. As usual, Cft also met with the minister of Finance Ferrier to discuss government finances. During the different meetings, the focus was especially on the deficits of 2017 and 2018 as well as the liquidity position. Furthermore, Cft expressed its concern about the non-improving state of financial management and the continuous IT-problems that handicap government and parliament in executing their responsibilities. Cft also visited the Sint Maarten Medical Centre, the harbor and spoke with representatives from the airport and the reconstruction team for Sint Maarten.

Regarding the 2017 deficit, Cft pointed out that for the budget to be compliant with the law of financial supervision (Rft), additional decision-making by the Kingdom Council of Ministers (RMR) is required. The draft budget for 2018, which was recently presented to Cft, will be a big challenge for Sint Maarten. The presented deficit is substantial and the substantiation of the presented figures is not sufficient at this point.

Cft-chairman Gradus: ”Cft is aware of the difficult circumstances for Sint Maarten. However Cft cannot properly advice on a budget without proper substantiation”. Cft also pointed this out in its advice on the draft budget that was issued on the 8th of February to the minister of Finance. Although Sint Maarten will probably need help from the Dutch Government regarding the 2018 budget, it is also important to look at what measures Sint Maarten can take itself to decrease the presented deficit. These measures are not reflected in the budget yet.

Raymond Gradus: “It is important that Sint Maarten shows that available and reasonable measures to minimize the deficit, even under these difficult circumstances, should be mentioned in the draft budget 2018”.

Concern was furthermore expressed about the liquidity position of Sint Maarten. On different occasions it was stated by Sint Maarten that the coffers will soon be empty and that the need for additional liquidity is imminent. A proposal for additional liquidity for 2017 was offered by the State Secretary of  Kingdom Relations. For this, some formal steps have to be taken by Cft, government and Parliament, amongst others.

Cft also stresses the importance of getting the economy going again. The Reconstruction Fund of EUR 550 million plays a vital role in restarting the economy. A boost in economic activity can have a positive influence on government’s finances and the expected deficit. Cft took a part in intensive discussions between the government of Sint Maarten, the Dutch government, the IMF and the World Bank this week. These constructive deliberations will support progress and cooperation in the process towards reconstruction.

During its visit Cft again pointed out the necessity for improving financial management and solving the IT-problems that started in the third quarter of 2016. For years, there has been no significant improvement in financial management. This, combined with the ongoing IT-problems, provides insufficient and unreliable insight in government finances. “Without proper financial information Sint Maarten is flying in the blind” the Cft-chairman pointed out.

Over the course of time, Sint Maarten has not been able to prove that it independently can improve financial management. Therefore Cft advised to ask the Dutch government for technical assistance and capacity building in this regard. In the opinion of Cft, strong financial management would be beneficial for both Sint Maarten and the Netherlands.