PHILIPSBURG — Financial supervisor CFT projects a much higher positive result for St. Maarten’s 2023 budget than the government. According to the ministry of finance the result for 2023 will be a surplus of 1 million guilders ($558,659), but the CFT expects it to be between 20 and 30 million guilders ($11.1 to 16.7 million). This appears from the CFT’s advice about the 2023 budget amendment.
The budget amendment contains, in line with CFT-advice, multi-annual surpluses and multi-annual estimates for the capital budget.
Because the budgetary year is over, the CFT suggests involving its current advice in the 2024 budget.
Initially the budget amendment showed a surplus of 1 million guilders for 2023 but this was later adjusted to 5 million ($2.8 million). The CFT disagrees with these numbers and states that it expects a positive result of between 20 and 30 million guilders. This also enables St. Maarten to create higher multi-annual surpluses.
The budget amendment the CFT received on December 28, 2023, projects and increase of 23 million to 518 million ($289.4 million) in revenue and an increase of expenditures by 22 million to 517 million ($288.8 million), mainly based on higher tax income.
“The increased income is cause by a stronger recovery of the economy and by the execution of projects in the context of the country package,” the advice states.
The increased expenditures are caused by higher costs for personnel, goods and services. Among these costs are expenditures for the government healthcare regulation (OZR) and retroactive payments to the police force. Expenses for garbage collection and depreciations also went up.
St. Maarten has budgeted a surplus of 2 million guilders ($1.1 million) for 2024 and 2025 and 6 million ($3.3 million) for 2026. These numbers are lower than previously projected, mainly due to annual payable interest for the refinancing of liquidity loans.
The budget amendment includes 46 million ($25.7 million) for investments in 2024. For the following two years, St. Maarten aims to invest 1 percent of gross domestic product (GDP).
“The budgeted investment level is still below the average regional investment level of 4 percent of GDP,” the CFT points out. It advises St. Maarten to work towards a higher investment level.
In early November 2023, St. Maarten received a capital loan of 61 million guilders ($34 million). The CFT expects that the majority of planned investments will be moved up to 2024. “The CFT recommends St. Maarten to bear in mind the available implementation capacity for the realization of investments.”
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COMMENTARY
The Mirage of Fiscal Success: Unraveling the Government’s Budget Surplus
Introduction:
The recent revelation by the College Financieel Toezicht (Cft) that St. Maarten’s government is poised to achieve a budget surplus significantly higher than initially projected has sparked both praise and skepticism within the community. While some commend the Jacobs Cabinet for their apparent fiscal management success, others raise concerns about the long-term implications of this surplus, hinting at potential financial smoke and mirrors.
The Optics of Success:
A well-known lawyer, in his recent commentary, rightfully lauds the Jacobs Cabinet for achieving a budget surplus estimated to be 20 to 30 times higher than the government’s own projections. This success, as outlined by the Cft report, is attributed to a stronger economic recovery and the execution of projects within the country package, resulting in increased tax income. On the surface, this appears to be a commendable accomplishment, and credit should indeed be given where it is due.
The Unseen Liabilities:
However, the narrative takes a nuanced turn when we consider the claims made by detractors, such as a well-known vocal politician, and government insiders, who suggest that the surplus might be a result of the government’s failure to settle debts with vendors, civil servants awaiting retroactive pay, and major creditors like the insurance company SZB and the pension fund APS. If these claims hold true, the budget surplus may be more of an optical illusion than a genuine reflection of sound fiscal management.
The Short-Term Gain vs. Long-Term Pain:
While a surplus in the budget for the fiscal year 2023 is undoubtedly a positive headline, the sustainability of this achievement comes into question when the focus shifts to the unpaid bills and liabilities that allegedly underpin this surplus. Not paying vendors and major creditors might offer a short-term boost to the government’s balance sheet, but it raises serious concerns about the long-term financial health of St. Maarten.
Financial Responsibility and Credibility:
Governments, like any other entities, must act responsibly in managing their finances. Failing to meet obligations to vendors, civil servants, and other creditors not only undermines the government’s credibility but also jeopardizes the economic stability of the island. The optics of a budget surplus lose their shine when the financial success is achieved at the expense of delayed payments and accumulating liabilities.
The Importance of Transparency:
For citizens to have confidence in their government’s financial management, transparency is paramount. If, as suggested by some voices, the surplus is a result of delayed payments and unaddressed liabilities, the government must communicate openly about its financial strategy and the steps being taken to settle outstanding debts. Transparent communication ensures accountability and fosters public trust in the government’s commitment to long-term fiscal responsibility.
Conclusion:
The news of St. Maarten’s projected budget surplus for 2023 is undoubtedly positive, reflecting a seemingly resilient economy and effective execution of planned projects. However, the underlying concerns raised by critics regarding unpaid bills and liabilities cast a shadow on the long-term sustainability of this success. As citizens evaluate the government’s financial achievements, it is essential to look beyond the optics and demand transparency and accountability to ensure that fiscal success is not a mere illusion, but a foundation for lasting economic stability.
