Investment-levels lag behind Caribbean average

PHILIPSBURG — The International Monetary fund (IMF) observes in its 2022 Article IV Consultation that public investments levels in St. Maarten are too low compared to the Caribbean region. The average Caribbean investment level is 4 percent of Gross Domestic Product (GDP), but up to 2016 St. Maarten invested just 1 percent.

This year, St. Maarten plans to invest in the construction of a new prison, in improvement and construction of school buildings and in the expansion of the sewage system. “In spite of these plans, St. Maarten’s investment level stays behind the Caribbean average with 1 to 1.5 percent of GDP,” financial supervisor Cft states in its 2023 half-year report that covers the period from January up to June.

According to the IMF, St. Maarten should develop institutions to support decisions about good investments. “An integral consideration of priorities cannot take place if the government does not have a clear vision,” the Cft-report observes.

Investment levels remain a headache. St. Maarten projects to invest 90 million guilders ($50.2 million) this year but in the first quarter it invested just 100,000 guilders ($55,866). “St. Maarten expects to realize other investments in the second half of 2023,” the Cft-report states.

The Cft-report furthermore points out that St. Maarten has committed itself to the Sustainable Development Goals. “Increasing investments in infrastructure is not the only way to increase inclusivity through better mobility. This can also be achieved by reforming the system of public transport,’ the report notes.

The Cft states that St. Maarten closed 2022 with a deficit of 39 million guilders ($21.8 million) and that this is better than expected. The result is due to underspending on good and service and personnel and on higher revenue. The first quarter of 2023 also shows better than expected numbers: the result is 25 million guilders ($14 million) higher than budgeted. This is also due to underspending and higher tax revenue.

In the first quarter, St. Maarten collected 137 million guilders ($76.5 million) in taxes, 36 million ($20.1 million) more than during the first quarter of 2022. While this sounds rather positive, the Cft states in its report that it has advised St. Maarten several times to reform its tax system and to broaden the tax base. So far, there is not a lot of progress.

Speaking of taxes: the country wants to introduce a tourist tax (to be collected upon arrival) and to intensify the lodging tax. “This way platforms like Airbnb will become “actively involved in levying taxes.”