Published On: Thu, Jun 3rd, 2021

Cft urges St. Maarten to implement revenue-increasing and cost-cutting measures

PHILIPSBURG — St. Maarten has to speed up the implementation of revenue-increasing and cost-cutting measures if it wants to return to structural budget-surpluses in the near future. “Without additional measures, the International Monetary Fund expects that the balance on the regular budget will remain negative until 2026,” financial supervisor Cft states in its advice about the amended draft budget for 2021.

The maximum deficit on the 2021 budget cannot be higher than the amount of liquidity support St. Maarten stands to receive received this year. The draft budget projects revenue of 380 million guilders ($212.3 million) while expenditures total 608 million ($339.7 million). Thus, the budget shows a deficit of 228 million guilders ($127.4 million).

The Cft is highly critical of the draft budget Finance Minister Ardwell Irion submitted to the financial supervisor on April 16. Irion submitted a first draft on January 4. That draft showed revenue of 369 million guilders ($206.2 million) and expenditures totaling 540 million ($301.7 million) – a deficit of 171 million ($95.5 million).

The budgeted expenditures in the latest draft include 128 million guilders ($71.5 million) for support measures associated with the corona-crisis. The Cft notes that both revenue and expenditures are insufficiently substantiated in the draft budget.

Furthermore, the Cft points out the Kingdom Council of Ministers decided in December 2020 that the effect of the measures contained in the country package have to be included in the budget.

“Sint Maarten does not explain the financial consequences of the country package in a separate paragraph. The capital budget is balanced, but there is no multiannual projection. This way St. Maarten does not meet the requirements of the kingdom law financial supervision, article 15.1.b,” the Cft states.

The financial supervisor considers it “essential” that St. Maarten works towards a budget with a structural surplus. “This is why the Cft advises emphatically to begin this year with compliance and revenue-increasing measures and with measures to lower costs, among them the lowering of personnel costs.”

The Cft points out that St. Maarten has not managed to produce an approved budget in a timely manner “just like during the past couple of years.” The budget must be approved by December 15 of the previous year. Since that deadline is long gone, the Cft urged St. Maarten in its advice dated April 30, to establish the budget by May 15 – a deadline that has also come and gone.

Lastly, the Cft notes that not all of the recommendations it provided in its advice of January have been included in the new draft budget.