Cft urges Minister Ferrier to hire technical assistance

PHILIPSBURG – Financial supervisor Cft  urges Minister Mike Ferrier (Finance) to hire technical assistance to increase the capacity at the finance department, including the tax inspectorate. “Possibly technical assistance can be requested and deployed in these fields in the context of the reconstruction,” Cft-chairman Raymond Gradus writes in a letter dated April 26.

The Cft furthermore notes that St. Maarten needs additional capacity to finalize the annual financial accounts 2016 and 2017, the financial report over the first quarter of 2018 and the monthly report about the execution of the 2018 budget.

The financial supervisor received the execution report over the second half of 2017 on April 13. This report gives “the best possible impression of the financial situation per December 31, 2017.” However, the report is based on “available data and assumptions.” The Cft asks Minister Ferrier (see photo left) to confirm that the report is definite; the annual financial account 2017 is the next document the Cft expects to receive from the finance ministry.

The 2017 budget deficit is lower than the initially projected 153.2 million guilders due to higher than expected receipts of wage taxes (+24 million) and turnover taxes (+12.9 million). Other receipts are 13.5 million higher; the Cft notes that this concerns non-allocated cash receipts and that it is unclear whether these can really be booked in. This will have to appear from the 2017 financial account.

St. Maarten furthermore managed to narrow the still significant hole in the 2017 budget through lower personnel costs (-14.5 million) and lower expenditures on goods and services (-16.4 million).

The lower personnel costs are due to a vacancy stop, but also, the Cft notes, because there was insufficient progress with the recruitment for critical functions.

The risk paragraph in the report over the second half of 2017 focuses on Social and Health Insurance SZV. The finance ministry expects that SZV will present a final invoice for OZR (the health insurance for civil servants) of 18.4 million; the annual deficits in the ZV/OV fund and the FZOG-fund are 12 million guilders. Another risk is the division of assets of the AVBZ-fund with SZV Curacao for an amount of 9.8 million.

The Cft advises the minister to enter into talks with SZV on short notice to get clarity about these financial risks.

The Cft wants to discuss the compensation of deficits from previous years in the second half of this year with Minister Ferrier. On March 16, when the Kingdom Council of Ministers agreed to allow St. Maarten a non-balanced budget because of the impact of Hurricane Irma, the council also decided to reconsider the country’s obligation to compensate these deficits.

At the request of the Kingdom Council of Ministers, the Cft will get in touch with Minister Ferrier about the moment the country will be able to realize the deficit-compensation. The Cft will then advise the Kingdom Council of Ministers about the outcome of these talks.

The Cft furthermore notes that the Project Improvement Financial Management is not going according to plan. With the Cft, the government accountant bureau SOAB and the General Audit Chamber have devoted a lot of attention to this issue. In the execution report over the second half of 2017 Minister Ferrier indicates that agreements are being prepared with the Ministry of Home Affairs and Kingdom Relations to improve the capacity at the finance department on short notice. The financial supervisor asks Minister Ferrier for an elucidation about these agreements.